ISLAMABAD: “Middle East crisis poses serious risks to Pakistan’s economy, it also creates a limited but meaningful opportunity for structural reforms, better governance, and strategic economic realignment if appropriate and coordinated policies are implemented in time”.
Participants at a roundtable titled “The Middle East Crisis: Economic Implications and Emerging Opportunities for Pakistan reached this consensus.
The roundtable was hosted by Institute of Strategic Studies Islamabad (ISSI) and Policy Research Institute of Market Economy (PRIME) on Tuesday.
It brought together leading policymakers, economists, and experts to discuss evolving geopolitical situation and its economic impact on Pakistan.
Dr Neelum Nigar, Director of Centre for Strategic Perspectives (CSP) at ISSI, emphasised Pakistan faces both increased risks and emerging opportunities, and must enhance its capacity to adapt to an increasingly complex global economic environment.
Pakistan’s former ambassador to China, Ambassador Khalid Mahmood, who also serves as Chairman of Board of Governors at ISSI, highlighted developments in Middle East have significant implications for Pakistan, especially in terms of energy security, trade flows, remittances, and overall economic stability.
Dr Ali Salman, CEO of PRIME, in his opening remarks, pointed out growing overlap between geopolitics and economics, noting current crisis underscores importance of geo-economics in shaping policy discussions.
He referred to emerging regional developments, including new transit arrangements and shifting diplomatic engagements, as signs of Pakistan’s evolving strategic position. He stressed Pakistan must move beyond traditional conflict-driven narratives and instead focus on gaining economic benefits through proactive diplomatic and economic engagement.
He also outlined key areas for discussion, including the economy, energy, trade, Pakistan-China cooperation, and policy preparedness.
Dr Hassan Dawood Butt observed Pakistan is increasingly being viewed as a potential regional intermediary, but cautioned without deep institutional reforms, the country may not be able to fully capitalise on this role.
Dr Nasir Iqbal (PIDE) identified key macroeconomic risks such as rising oil prices, inflationary pressures, declining remittances, and disruptions in exports, while also pointing to potential opportunities in reconstruction markets in the Gulf.
Dr Khaled Waleed (SDPI) highlighted structural weaknesses in Pakistan’s energy sector and called for modernisation of power grid, expansion of renewable energy, and improved energy storage capacity.
Dr Uzma Zia stressed the need to move away from reliance on remittances towards a more diversified economic model based on trade, logistics, and regional connectivity, including the modernisation of ports and development of integrated economic corridors.
Dr Vaqar Ahmed pointed out governance and coordination challenges, emphasising the need for stronger institutional frameworks, better data sharing, strategic reserves, and proactive economic diplomacy.
Experts collectively highlighted several key policy directions emerging from the discussion:
Pakistan must reset its governance and policy framework to better transform external shocks into structured economic opportunities and improve crisis preparedness.
Re-engagement with multilateral institutions, including the IMF, is necessary, with a focus on securing a more balanced programme aligned with long-term reforms and growth objectives.
Pakistan’s external account remains under pressure, particularly as remittances from the Middle East may become volatile due to regional instability. At the same time, new opportunities are emerging from changing regional connectivity patterns. Pakistan’s private sector must position itself to benefit from new transit and trade routes, including those developing through Iran and nearby corridors.
Strong emphasis was placed on infrastructure readiness, with calls for strategic investment in port infrastructure, especially Karachi and Gwadar, to take advantage of growing transshipment and logistics opportunities in a rapidly evolving regional trade landscape.
