Islamabad: Business and economy journalist Khurram Husain has said that war does not merely create temporary disruption, it leaves behind long-term economic and institutional consequences.
Mr Husain was addressing a webinar on “War and economic volatility in Pakistan” organised here by Pakistan Institute of Development Economics (PIDE). Drawing on Pakistan’s economic history, Mr Husain 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 nationalisation era. Likewise, the crises surrounding the 1990 standoff, the nuclear tests and the Kargil conflict accelerated financial liberalisation, foreign exchange restrictions and later privatisation. His central argument was that while volatility may fade, the policy structures and institutional responses it creates often endure for years.
Mr Husain observed that even if Pakistan is not directly involved in the present conflict, it remains highly exposed to its global economic spillovers. He 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.
He warned that the full impact of the oil shock had not yet materialised and argued that the world was 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.
