World Bank flags Middle East conflict as top risk to Pakistan's economy
A prolonged or intensified Middle East conflict is the biggest near-term risk to Pakistan's economy, the World Bank has warned in its Pakistan Development Update: Attaining Escape Velocity, citing the country's heavy reliance on Gulf energy supplies.
The lender said petroleum and gas accounted for around 25% of Pakistan's total imports in fiscal year 2025, with Gulf Cooperation Council countries supplying nearly 80% of those imports. According to the report, petroleum imports rose 9.2% year-on-year during January to June 2026, while the crude oil import bill surged 46.4%.
The World Bank cautioned that persistently high energy prices could widen the current account deficit, strain foreign exchange reserves and fuel inflation. Disruptions to trade routes and weaker export demand could further undermine economic activity and household purchasing power, it said.
The warning places energy-import dependence at the centre of Pakistan's external vulnerability, a concern that has repeatedly shaped the country's balance of payments position in recent years.
