A prolonged Middle East conflict could intensify Pakistan’s economic challenges by driving up energy prices, increasing import costs and putting pressure on foreign exchange reserves, the World Bank has warned.
In its report, Pakistan Development Update: Attaining Escape Velocity, the lender identified an extended or intensified conflict as the biggest risk to Pakistan’s near-term economic outlook.
The report noted that petroleum and gas accounted for around 25% of Pakistan’s total imports in fiscal year 2025, with Gulf Cooperation Council (GCC) countries supplying nearly 80% of these imports.
Pakistan’s petroleum imports rose 9.2% year-on-year during January–June 2026, while its crude oil import bill surged 46.4%, according to the report.
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.
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