US-Iran conflict poses risks to Pakistan’s growth, inflation outlook: Aurangzeb

Finance Minister Muhammad Aurangzeb warned on Monday that the conflict between the United States and Iran could negatively impact Pakistan's economic growth and inflation rates. The finance minister highlighted that Pakistan was transitioning from stabilization to growth, with a projected GDP growth of over 4% for the current fiscal year.

However, he acknowledged that the ongoing conflict posed significant challenges to achieving this growth. The tension in the Middle East escalated after US forces targeted two Iranian launchers on Iran's Larak Island on Sunday, marking the first such American strike since late July. The strike led to the blockade of the Strait of Hormuz, a crucial route for approximately one-fifth of the world's oil supply.

Addressing the "Partnerships That Power Progress" event organized by EXIM Bank in Islamabad, Aurangzeb emphasized that the primary concern was not growth but achieving sustainability through an export-led and private sector-driven economy. The government has been utilizing fiscal space to support this growth, reducing the super tax and eliminating advance tax.

Aurangzeb noted that despite the policy rate of 11.5%, financing was now available to exporters at 4.5%, thanks to the efforts of the Pakistan Exim Bank. The finance minister stressed the need for Pakistan to diversify its export base, both in terms of products and services, and across various segments.