The International Monetary Fund (IMF) has warned that Pakistan could face rising inflation, higher borrowing costs and a weaker external position due to the ongoing Middle East conflict.
In its October 2026 Regional Economic Outlook, the IMF reported that Pakistan’s inflation reached 11.1% in August, driven by rising food and energy prices. The Fund also expects imports to increase and remittance growth to moderate, potentially putting additional pressure on the country’s foreign exchange position.
The IMF cautioned that prolonged regional tensions could make oil imports more expensive and force Pakistan to consider further interest rate increases. Higher borrowing costs could also increase the government’s debt burden and limit spending on development.
Despite these challenges, Pakistan’s economic activity remained broadly resilient during the first half of 2026. However, limited fiscal space leaves the government with fewer options to provide widespread financial relief.
The IMF recommends prudent monetary and fiscal policies, improved tax collection and targeted assistance for vulnerable households.
Conclusion Pakistan’s economic outlook remains uncertain as geopolitical tensions threaten price stability and external financing. Strong economic management and structural reforms will be essential to control inflation and strengthen the country’s financial resilience.