If a war breaks out between Pakistan and India, it could cause a serious economic disaster for Pakistan. Right now, the country is already in a very difficult situation. It needs to pay back around $22 billion in loans by 2025, but it only has $8 billion in its reserves. This amount is so small that it can only pay for about one and a half months of imports, like fuel and medicine.
If there is a war, more money would be needed for the army, and Pakistan might not have any money left to pay back its debts. This situation could lead to a “sovereign default,” meaning Pakistan won’t be able to repay its loans, which would close its doors to borrowing more money from other countries or institutions.
Another big problem is the falling value of the Pakistani rupee. It is already very weak, trading at 308 rupees per dollar. If war begins, the value could drop to 400, making everything from food to fuel more expensive for the average person. The country is also part of a $3 billion loan program with the IMF, which has strict rules. These rules include keeping peace in the region and cutting government spending. War would break both of these rules, and the IMF could stop giving any more money.
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Trade Freeze and Rising Prices
Trade between Pakistan and India is also at risk. Right now, there is about $2 billion worth of goods traded between the two countries, including important items like medicines and chemicals. If war starts, this trade would stop. Pakistan already depends on imports for many of its needs, and without them, life could become very difficult for everyday people.
Another major concern is Pakistan’s sea trade. Around 95% of its goods move through the ocean. If India uses its navy to block this sea route, it would stop exports like clothes and rice, and also stop fuel and other important goods from entering the country. This could lead to a big shortage of items, double their prices, and create unrest in the cities.
There is also fear of Pakistan being blacklisted by FATF, the Financial Action Task Force. If this happens, Pakistan could be cut off from the global banking system. It would not be able to send or receive money easily from other countries, which would freeze business deals and possibly affect people’s savings abroad.
National Chaos and Displacement
If the situation turns into a full war, millions of people might be forced to leave their homes. Experts believe that between 10 to 20 million people could be displaced. Pakistan’s already struggling healthcare and social services will not be able to support such a huge number of people. The industries may also stop working due to fuel shortages and import bans, making unemployment worse and pushing more families into poverty.
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There is also a risk of important industries being bombed, like the ones in Kamra and Taxila. These are places where Pakistan makes weapons and machinery. If these are destroyed, it could push back the country’s development by many years. On top of that, if the situation becomes very unstable, countries like Saudi Arabia, the UAE, and even China might stop investing in Pakistan. China’s CPEC projects worth $62 billion are already on hold and could be completely stopped if war breaks out.
Social Breakdown and Financial Isolation
Pakistan’s overseas community, around 8 million people, might also face trouble. They could lose their jobs, have their assets frozen, or even be deported. This would cut off $31 billion in remittances that these workers send back home every year — money that helps many families survive.
Lastly, Pakistan’s stock market is already falling. After the recent tension in Pahalgam, the PSX-100 index dropped by 1,000 points. If the conflict gets worse, it could crash by 30 to 50 percent, destroying around $15–20 billion in market value. This would hurt businesses and investors alike and cause more panic among the public.
In such a tense situation, even basic needs like food, fuel, and electricity could become hard to find. There could be riots in cities as people struggle to get what they need. Agriculture could also suffer badly if India blocks the water supply under the Indus Waters Treaty, which supports nearly a quarter of Pakistan’s economy.
