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Pakistan's Economy Vulnerable to Strait of Hormuz Disruption, Report Warns
The Pakistan Institute of Development Economics has issued a warning regarding potential economic risks to Pakistan. A disruption in the Strait of Hormuz could trigger inflation and external instability for the country.
According to Geo News, a new study has found that Pakistan's economic system is highly exposed to potential oil supply shocks. The Pakistan Institute of Development Economics assessment indicates that even minor disturbances could drive up fuel prices and worsen inflation. The report, titled "Pakistan's Exposure to a Strait of Hormuz Shock: Fuel Pricing, Inflation, and External Vulnerability," presents a detailed analysis of potential economic consequences. Approximately 20 million barrels of petroleum pass through the Strait of Hormuz daily, representing one-fifth of global petroleum. Any logistical breakdown or geopolitical tension in the Strait of Hormuz could cause oil prices to increase rapidly. Energy imports account for over 22% of Pakistan's total imports.
Key Facts
- The Pakistan Institute of Development Economics warns of economic risks to Pakistan.
- Disruptions in the Strait of Hormuz could trigger inflation and external instability.
- Pakistan's economic structure is vulnerable to oil supply shocks.
- Minor disturbances could increase fuel prices and worsen inflation.
- Energy imports account for over 22% of Pakistan's total imports.
- Rising oil prices, freight costs, insurance premiums, currency depreciation, and domestic taxes could amplify fuel prices.
- One-fifth of global petroleum passes through the Strait of Hormuz daily.
Primary Source
Research Sources
- Asian News International (ANI) — Pakistan's economic fragility exposed as Strait of Hormuz risk looms large