For centuries, the Silk Road carried merchants, scholars and ideas through the passes and ports of South and Central Asia.
Pakistan, located at this historic crossroads, has always been part of these flows of exchange. Today, the map of global trade is shifting once again. The recent tariff measures by the US have shaped supply chains and encouraged alternative alignments, while states such as China, Russia and North Korea are seeking new partnerships. The flows of goods and capital that once passed along caravans now move through container ships and digital networks, but the question remains the same: how can Pakistan use its geography to shape its economic future?
Pakistan’s economy illustrates both opportunity and strain. Exports reached approximately $30 billion in FY2024–25, led by textiles, IT services and agricultural products. Imports, however, were around $53 billion, reflecting a persistent trade imbalance. Remittances of $29 billion in 2025 helped ease external pressures, underlining the importance of overseas labour markets.
This imbalance highlights the need to align trade policy with growth priorities. Pakistan’s ports connect directly to global shipping networks, while western corridors through Torkham and Chaman provide access to Central Asia. Infrastructure developed under the China–Pakistan Economic Corridor (CPEC) has begun to open these routes; however, sustained investment, regulatory clarity, and stability are necessary to translate them into durable economic gains.
The global landscape Pakistan must navigate is increasingly fluid. In response to tariff-driven disruptions, China, Russia and North Korea have intensified their discussions on trade and cooperation, holding trilateral meetings that touch on energy, logistics and transit. While these initiatives remain at an early stage, they signal that excluded economies are seeking to build new alignments outside traditional frameworks.
Pakistan, meanwhile, participates in platforms such as the Shanghai Cooperation Organisation (SCO), where both security and trade issues converge. These forums provide proximity to discussions that could affect regional flows of goods and investment. The question is whether Pakistan will assume the role of a mediator between these evolving blocs, or whether it will channel its efforts primarily into advancing its own economic agenda.
Domestic priorities frame the choices ahead. The federal budget for FY2025–26 set total expenditure at Rs18.9 trillion, of which Rs9.8 trillion is allocated to debt servicing, Rs2.1 trillion to defence and Rs3.8 trillion to development spending. Within these constraints, resources for infrastructure, energy and social services remain limited, making external integration both an opportunity and a challenge.
Provincial disparities also shape outcomes. Punjab and Sindh dominate industrial output and exports, while Khyber Pakhtunkhwa and Balochistan remain resource-rich but underdeveloped. The uneven spread of investment has long-term implications for stability and growth. Unless regional assets such as hydropower, minerals and border trade are harnessed, Pakistan risks limiting the breadth of its participation in global supply chains.
Pakistan’s untapped potential remains significant. Hydropower capacity exceeds 18,000MW, of which less than 15 per cent has been utilised. Mineral resources, particularly in KP and Balochistan, have yet to be systematically developed for export value. Tourism, which once thrived during more stable decades, is recovering domestically, with Swat, Chitral and Gilgit-Baltistan seeing rising visitor numbers.
Connectivity is central to unlocking this potential. The Gwadar Port anchors Pakistan’s southern coast, linking maritime trade routes to inland corridors. Border crossings at Torkham and Chaman offer natural gateways to Central Asia. If supported by infrastructure and policy continuity, these routes could echo the Silk Road tradition of exchange, positioning Pakistan once again as a conduit for commerce between regions.
Some analysts draw comparisons with the Arab Gulf states, which in past decades used their diplomatic capital both to mediate conflicts and to modernise their economies. Pakistan may face a similar choice. Diplomatic mediation can raise an international profile, but it is sustainable only if supported by domestic economic strength.
That strength lies in diversification. Expanding IT exports, supporting agro-processing and investing in digital and green technologies can position Pakistan to benefit regardless of how global blocs evolve. Energy security is equally central, not only for industrial growth but also for maintaining competitiveness in regional trade.
Global trade is shifting, alliances are being redrawn and new economic corridors are emerging. For Pakistan, these developments revive an old question: how to translate geography into opportunity. Just as caravans once passed through its valleys carrying goods and ideas along the Silk Road, today’s flows of energy, technology and investment can position the country as a vital node in the international economy.
The choice lies in whether Pakistan primarily seeks to mediate between blocs or to channel these shifting currents into its own development agenda. History shows that Pakistan has always stood at a crossroads. In this moment of change, it has the chance to ensure that the currents of trade and cooperation passing through its territory are not merely transitory but become the foundation of long-term growth.
The writer is a transnational educational consultant, freelance columnist and policy analyst based in Lahore.
