US-Iran War Threatens Pakistan’s Economy: Finance Minister

Pakistan's economy and inflation projections could be threatened by the ongoing conflict between the United States and Iran, according to Finance Minister Muhammad Aurangzeb. Speaking at a recent event, Aurangzeb said that while Pakistan's economic growth had begun to exceed 4 percent in the current fiscal year, the war could have an impact on both inflation and GDP.

The situation escalated after US forces attacked Iranian forces on Iran's Larak Island earlier this month, leading to the blockade of the Strait of Hormuz, a critical global energy transit route. Aurangzeb stressed that Pakistan's immediate economic challenge is now ensuring that growth remains sustainable, rather than simply focusing on growth itself.

The government has taken steps to support this strategy, such as reducing the super tax and eliminating advance tax, and facilitating export financing at an interest rate of 4.5 percent, even though the official policy rate is 11.5 percent. Aurangzeb emphasized the importance of Pakistan's export-led growth approach and urged the nation to diversify its export base to both products and services in different market segments.