PIDE holds webinar on 'War and Economic Volatility in Pakistan'

ISLAMABAD, (UrduPoint / Pakistan Point News - 9th Apr, 2026) The Pakistan Institute of Development Economics (PIDE) on Thursday organized a webinar titled “War and Economic Volatility in Pakistan” to examine the far-reaching economic consequences of regional conflict, oil market disruption, and external sector instability for Pakistan.

The session featured Prominent business and Economy Journalist Khurram Husain as speaker and was moderated by Dr Faheem Jehangir, Dean, Policy Advocacy, PIDE, a news release said.

Opening the session, Dr Faheem Jehangir highlighted the significance of the topic, noting that Pakistan remains particularly vulnerable to external shocks due to its dependence on oil imports, exposure to inflation, exchange rate pressures, fiscal strain, and reliance on remittances from Gulf economies.

He observed that the evolving regional situation has once again brought into focus the difficult policy choices facing the government in areas such as fuel prices, energy transition, transport costs, and overall macroeconomic stability.

Presenting expert views on the topic, Khurram Husain argued that war does not merely create temporary disruption; it leaves behind long-term economic and institutional consequences.

Drawing on Pakistan’s economic history, he explained that episodes of war-related volatility in 1965, 1990, and 1998–99 produced reserve pressures, inflation, import restrictions, foreign exchange rationing, and an expanded role of the state in determining economic outcomes.

He noted that the 1965 war contributed to reserve depletion, high deficit spending, inflation, and tighter state control, developments that eventually fed into the nationalization era.

Likewise, the crises surrounding the 1990 standoff, the nuclear tests, and the Kargil conflict accelerated financial liberalization, foreign exchange restrictions, and later privatization.

His central argument was that while volatility may fade, the policy structures and institutional responses it creates often endure for years.

Turning to the present, Husain identified the country’s external sector as the main channel of vulnerability, especially through pressure on reserves, uncertainty around foreign deposits, and rising imported energy costs.

He described oil price volatility linked to the Strait of Hormuz as the most serious immediate threat to Pakistan and the wider global economy.

Husain warned that the full impact of the oil shock had not yet materialized and argued that the world had been moving toward an exceptionally severe energy crisis before the recent ceasefire offered temporary relief.

According to him, had the disruption continued, it could have triggered a crisis of extraordinary scale, with panic buying, rationing, and deep global instability.

He further noted that the current episode may leave behind one especially important legacy for Pakistan: an expanded role of the state in economic management.

He also said that learning from this episode, Pakistan must revisit its energy policy and transition decisively toward renewable energy sources to meet its energy needs through a more sustainable, resilient, and cost-efficient model.

During the question-and-answer session, Husain said that Pakistan’s inflation outlook would depend heavily on the direction of oil prices and the speed with which maritime trade and shipping normalize.

However, he cautioned that even under a de-escalation scenario, disruptions in the Gulf could continue to keep inflation elevated through 2026.

In the short run, he stressed, Pakistan’s priority would remain crisis management: protecting reserves, addressing external financing pressures, and keeping the IMF program on track.

The webinar reaffirmed PIDE’s role as a leading platform for evidence-based policy dialogue on Pakistan’s most pressing economic challenges.

By linking current regional developments with Pakistan’s historical experience, the discussion underscored the need for policymakers to look beyond immediate relief and prepare for the longer-term structural effects of conflict-driven volatility.