Page 55 - CMA Journal (Mar-Apr 2026)

Due to heavy reliance on a single sector, it becomes difficult In the current scenario, Pakistan must grasp the opportunity
for the economy to absorb external shocks, which to regain its economic direction and become a regional trade
immediately translates into in ationary pressure. hub by effectively utilizing CPEC projects and reducing
dependence on vulnerable channels. However, such shifts
Impact of Geopolitical Shocks on Pakistan
require proper planning, policy continuity, and investment,
In the current scenario which has arisen due to the war in the and unfortunately Pakistan is lacking in these areas. The top
Middle East, the negative impacts of the war affect Pakistan's priority for policymakers is to consider diversi cation of
economy. In the shape of a hike in oil prices, domestic fuel supply chains and trade routes because heavy dependence
prices go up, which pushes transportation and electricity on limited partners and routes exposes the economy to
prices up by many folds and ultimately increases in ation. repeated shocks. Pakistan must expand and diversify its
When import costs go up, it increases the demand for dollars, supply chain channels and trading partners in the region,
which puts pressure on the Pakistani rupee and leads to which can provide relief in such scenarios.
currency devaluation, making imports more costly.
On the other hand, Pakistan must enhance its reserves of
Due to this, Pakistan's economy is trapped in a vicious cycle. essential commodities such as oil, gas, and food to remain
The textile sector depends on imported raw material for its economically stable during shocks. Due to nancial
nished goods, due to which the industry fails to complete
international orders and does not meet export deadlines, constraints, this must be done gradually, but policy
resulting in nancial losses for exporters. When these kinds continuity remains essential, following the principle of “slow
of situations occur, the shocks faced by economies like and steady wins the race.
Pakistan are not sector speci c but are interconnected across Another serious concern that must be addressed on a war
multiple sectors. From a policy point of view, it requires footing basis is industrial development. Providing
proper policy measures. protection to all industries is not viable; policymakers should
Sectoral Impacts focus on key industries such as petrochemicals, fertilizers,
and import substitution industries to reduce dependency on
1) Energy Sector: In Pakistan's perspective, the energy imports.
sector is heavily dependent on imports. A slight increase
in energy prices directly increases the cost of domestic The government should also focus on logistics and trade
electricity and fuel, which badly affects government facilitation by improving customs processes, speeding up port
nancing projects, households, and industries. operations, and enhancing logistics infrastructure, which can
reduce trade costs and provide relief to the public. Pakistan must
2) Manufacturing Sector: Developing countries like
focus on regional trade, particularly with Central Asian countries
Pakistan, whose industries are heavily dependent on
and China, which can provide breathing space to an economy
imported raw materials, face serious disruption when
supply chains are disturbed. Production processes dependent on fragile supply chains. Macroeconomic
management should be streamlined, exchange rates stabilized,
break down, the cost of production increases,
and foreign exchange allocation improved for better outcomes.
competitiveness in international markets declines, and
exports decrease. The rapid political changes in the region send warning
3) Agriculture Sector: Pakistan's economy is an signals for developing economies like Pakistan. If preventive
agriculture-based economy. This sector is also badly measures are not taken and policies are not adopted to
affected by increases in energy costs and input prices reduce dependence on imported energy and raw materials,
such as fertilizers and pesticides, which further increases such crises will continue to recur. This is the right time for
food in ation. Pakistan to transform this challenging situation into an
opportunity to achieve a stronger regional position. Because
Emerging Risks and Outlook
in today's world, economic strength is no longer de ned by
The world's economic dynamics are rapidly changing, and it efficiency alone. It is de ned by resilience.
seems difficult that these dynamics will return to their
previous position. Now regional trade blocks and newly
emerging alliances play a vital role in reshaping global About the Author: Mr. Farhan Nasim is an economics and finance
economic structures. professional with extensive experience in corporate leadership, policy
In this emerging scenario, it is difficult for developing coordination, and organizational management. He is currently serving as
Deputy Secretary General at the Federation of Pakistan Chambers of
economies to adjust their direction, particularly for Pakistan,
Commerce and Industry (FPCCI), where he has held multiple senior roles
which is heavily dependent on imported energy. In every since 2014. He holds an M.Phil. in Economics and Finance, a Master's degree
difficult situation, there is also a hidden opportunity, and it is in Economics, and is currently pursuing a PhD in Economics from the Applied
Economics Research Centre, University of Karachi. His research interests
the responsibility of policymakers to identify and utilize
include economic growth, trade policy, and investment efficiency, with
these opportunities to turn the situation in their favour. published work in these areas.

53 ICMA’s Chartered Management Accountant, Mar-Apr 2026