With Russia-Ukraine war, inflation to rise further
Hussain said the impact of rupee devaluation on inflation would be visible in two to six months. PHOTO: FILE
Experts have agreed that inflation in Pakistan is expected to spike further following the Russian invasion of Ukraine.
Talking to The Express Tribune, Pakistan Business Council (PBC) CEO Ehsan Malik said that Pakistan was already struggling to deal with the surge in global commodity prices and the conflict between Russia and Ukraine would exacerbate the problem.
“We saw Brent crude oil cross the $100-per-barrel mark,” he said. “Prices of petrochemicals are directly linked with the global oil prices, hence they are expected to soar as well.”
Citing that the imposition of sanctions on Russian energy supplies was likely, he anticipated that European economies would diversify the sources of fuel, which would put more pressure on oil prices.
He stated that the government of Pakistan would be left with little room to absorb the shock, hence the local fuel prices were expected to rise. On the positive side, this may lead to a decrease in consumption.
The US, UK and European Union are among the biggest export destinations for Pakistan, therefore, any impact on European economies would hit export earnings of Islamabad, cautioned Malik.
“Russia and Ukraine jointly supplied 70% of Pakistan’s wheat requirement last year, therefore, the cost of wheat import may swell due to the ongoing conflict.”
Though neither Russia nor Ukraine were major export markets for Pakistan, Moscow would pause investment in the Pakistan Stream Gas Pipeline project until the conflict with Ukraine ended, he pointed out.
In the meantime, the focus of Pakistan should be on maintaining good relations with its major export markets, he suggested.
Overseas Investors Chamber of Commerce and Industry Secretary General Abdul Aleem said that the visit of Prime Minister Imran Khan to Russia days before the invasion of Ukraine may not be welcomed by some countries.
“However, it is not expected to result in grave consequences for Pakistan because the Financial Action Task Force (FATF) is already punishing the country by keeping it on the grey list,” he said.
“We may witness unjustified threats to our trade and tourism sectors but they will be temporary and easy to manage.”
Pakistan Businesses Forum Vice President Ahmad Jawad said that Pakistan produced surplus potato, for which it could secure export orders from Russia.
Published in The Express Tribune, March 1st, 2022.
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