Pakistan is facing fresh economic pressures due to rising energy costs and global disruptions, according to the World Bank. The ongoing US-Iran conflict has added further uncertainty to the economic outlook. The World Bank said disruptions around the Strait of Hormuz are increasing pressure on Pakistan’s economy. The region is an important route for global energy supplies.
According to its latest regional economic update, fuel prices in Pakistan have increased sharply. Gasoline prices have risen by more than 40% during the period covered by the report. Diesel prices have also increased by more than 40%. Higher fuel costs can affect transportation, production and household expenses across the country.
The report also placed Pakistan among countries facing major debt and financing challenges. Rising borrowing needs and limited financial space continue to create economic pressure. The World Bank noted that Pakistan has already faced several economic shocks. These pressures have affected prices, household incomes and overall economic conditions.
Inflation has added to the difficulties faced by households. Currency depreciation has also increased the cost of imported goods and other essential products. The combined impact has contributed to worsening poverty levels. Higher living costs can place additional pressure on low-income households.
The report also highlighted risks linked to developments in the Middle East. Continued disruption around the Strait of Hormuz could further affect energy prices and economic conditions. For Pakistan, higher global energy prices could increase domestic costs. They may also create additional pressure on the country’s external financing needs.
Despite these challenges, the World Bank identified opportunities for Pakistan in the technology sector. Artificial intelligence could provide new avenues for economic growth and exports. Pakistan has the potential to develop its position as a talent-led AI services exporter. The country has a large pool of young professionals and technology workers.
Expanding AI-related services could help Pakistan increase its digital exports. It could also create new employment opportunities for skilled workers. However, stronger investment in digital skills and technology infrastructure would be important. Better access to training could help workers benefit from growing demand for AI services.
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The latest assessment presents both risks and opportunities for Pakistan. Rising fuel prices, inflation and financing pressures remain major concerns. At the same time, emerging technologies could offer new sources of growth. Pakistan’s ability to expand its AI services sector could support its economy in the coming years.
