Middle East conflict may trigger inflation, export pressure in Pakistan: FPCCI official

A leading business representative has warned that the ongoing conflict involving the United States, Israel and Iran could create serious economic challenges for Pakistan, as rising fuel prices increase inflation and business costs.

Mian Zahid Hussain, chairman of the Policy Advisory Board of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the government should consider using its contingency fund to offset the economic impact of higher energy prices.

He said growing geopolitical tensions in the Middle East are affecting global energy markets and the wider economy, making a coordinated national response essential to protect both the public and the industrial sector from the potential fallout of the global energy crisis.

Read: Karachi counts the cost of Rs55 fuel hike as fares rise, incomes fall short

Hussain said the disruption of shipping routes through the Strait of Hormuz is already affecting global supply chains, with countries dependent on imports facing the greatest risks.

Pakistan relies heavily on Gulf states for petroleum products and liquefied natural gas (LNG), he noted, meaning sudden fluctuations in global energy markets could have significant consequences for the country.

Read more: Oil prices fall as IEA weighs record emergency reserve release

He warned that the sharp rise in fuel prices is likely to accelerate inflation, widen the current account deficit, and significantly increase the cost of doing business for industries.

According to Hussain, higher industrial costs could also lead to a decline in Pakistan’s exports, which would further strain the country’s external accounts.

Also read: Fuel price hike pushes up ambulance and funeral transport costs in Karachi

To mitigate these risks, he suggested that the government temporarily absorb the additional costs faced by industries through its contingency fund. Such support, he said, could help prevent a drop in exports and limit pressure on the current account deficit.

Hussain also described Prime Minister Shehbaz Sharif’s recently announced 18-point austerity plan as a timely and necessary step.

He said the measures could help stabilise the fragile economy and reduce the likelihood of further financial burdens being placed on the public.