Produced by: Manoj Kumar
A short-term war could cost $1–2 billion per week. The 2001–02 standoff cost $1.2B; a month-long conflict today could rack up $5–8 billion in direct military expenses, draining state coffers fast.
With a GDP of $341B (2023–24 est.), even a modest 5–7% contraction from war would wipe out $17–24 billion in national output, according to economists at the State Bank of Pakistan.
Investor fear is a financial wildfire. Past escalations triggered stock plunges and withdrawals—war could spur $5–10 billion in capital flight, with investor confidence years from recovery.
Formal trade with India ($1.2B) would vanish overnight. Combine that with disrupted exports and airspace closure, and Pakistan could suffer $2–5 billion in trade and aviation losses alone.
A conflict would likely halt IMF tranches and World Bank lending. This would cut off access to $6–8 billion in lifeline funds, pushing Pakistan closer to sovereign default territory.
Any suspension of the Indus Waters Treaty would cripple agriculture, which employs 37.4% of Pakistan’s labor force. Drought and crop failure could unleash economic and social devastation.
The rupee could slide past ₨285/$, inflation would spike, and purchasing power would crash. Remittances may fall, while daily essentials become unaffordable for millions, says the IMF.
War spending would cannibalize public services. Education, health, and reform programs would stall, causing lasting damage to human capital and setting back Pakistan’s development by years.
In April 2025, mere tensions caused a 2,000-point dive in the KSE. War would erase years of gains, and foreign investors would flee, slamming the door shut on any near-term recovery.