Page 54 - CMA Journal (Mar-Apr 2026)

In the recent past the global supply chain has been The Strait of Hormuz is
considered as a simple economic system but in the current one of the world's
scenario it emerges as a geopolitical strategy for countries. In m o s t s e n s i t i v e
the newly developed situation due to the recent war, transportation choke
specially in the Red Sea and the Strait of Hormuz it gives a points, as around 20
huge shock to international trade networks. In Pakistan's percent of global oil
perspective it is not only external shocks but it hurts the supplies pass through
economy because it is heavily dependent on imports, i t . E v e n a s l i g h t
especially for its energy needs. We try to nd out how this disturbance in this
recent war can affect Pakistan's economic situation, a r e a c a n d i s r u p t
including its supply chain, in ation, exchange rate and most energy supply chains
importantly industrial production. and increase costs. In
Pakistan depends heavily on imports to sustain the smooth the recent past, the US
functioning of its economy, with energy imports China trade and tariff Farhan Nasim
constituting a signi cant share. At the same time, its narrow con ict has already Deputy Secretary General
export base and weak infrastructure remain major structural c h a n g e d g l o b a l The Federation of Pakistan Chambers
weaknesses. It is clear that unless Pakistan reorients its m a n u f a c t u r i n g of Commerce & Industry (FPCCI)
policies toward resilience, it will remain vulnerable to similar channels. The world is
shocks in the future, which could further undermine its already facing rising
fragile economy. Over the past decade, international supply cost pressures due to tariff hikes, and now another serious
chains have undergone major transformations that were not issue is emerging on the horizon: a possible US Iran war in the
easy to fully comprehend, and it would be fair to say that only Middle East. Because of this con ict, countries are focusing
a limited number of policymakers truly understood their more on the secure supply of their goods rather than low
signi cance. cost. This newly emerging scenario is entirely changing the
dynamics of developing economies, particularly in the case
What were once regarded as merely technical and logistical
of Pakistan, as it does not have sufficient industrial capacity
arrangements are now having a profound impact on
or diversi ed supply chain channels to absorb these shocks.
geopolitical realities. Developments in the Strait of Hormuz,
escalating tensions in the Middle East, and changes in the External Vulnerability of Pakistan
Red Sea region have made it evident that international trade
routes are no longer as stable and accessible as they once Due to the structure of Pakistan's economy, it is clear that any
were. This is especially concerning for a country like Pakistan, disturbance in the global supply chain will directly hurt
whose economy depends heavily on imports, particularly for Pakistan's economy. Pakistan is heavily dependent on
its energy needs. Whenever the international supply chain is import of oil for its energy needs. If we look into the import
disrupted, its effects are felt immediately and clearly, leading bill, it almost reached USD 16 to 17 billion in scal year
to higher fuel prices, rising in ation, and increased pressure 2023–24, and Pakistan imports 85 to 90 percent of its oil
on foreign exchange reserves. requirements for petroleum needs. Any uctuation in the
global supply chain of oil has a very devastating impact on its
Maritime Routes and Trade Risk economy.
The recent disruption in the Red Sea has compelled most On the other hand, internally Pakistan faces issues such as
shipping lines to change their routes and divert via the Cape port congestion, delays in customs clearance, and logistics
of Good Hope. This shift increases transit time signi cantly, costs that are higher compared to neighbouring countries.
by around 10 to 14 days, which ultimately raises All these issues increase prices and slow down economic
transportation costs. Passing shipments through war processing. Pakistan's exports also show a challenging
affected areas has signi cantly increased insurance costs, situation because a large chunk of exports comes from the
which are ultimately passed on to end consumers in the form textile sector, accounting for more than half of total exports.
of higher prices.
ICMA’s Chartered Management Accountant, Mar-Apr 2026 52