Pakistan Markets Crash Amid Geopolitical Tensions and Economic Strain

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New Delhi, May 8 (IANS) – Pakistan’s financial markets took a severe hit on Thursday as trading at the Karachi Stock Exchange (KSE) was suspended following a sharp decline triggered by escalating geopolitical tensions.

The KSE-100 Index plummeted over 6 per cent during early trading hours, prompting an automatic halt in trading activity. Since the April 22 terror attack in Pahalgam, which claimed the lives of 26 people—many of them tourists—the market has been on a downward spiral. The main benchmark index has fallen more than 13 per cent over this period, dropping from 118,430 points on April 22 to 103,060 at present.

The broader KSE-30 Index has also recorded a steeper decline, shedding over 14 per cent in the same timeframe.

This market turmoil comes at a time when Pakistan’s macroeconomic indicators remain deeply troubling. The country’s foreign exchange reserves have dwindled to just $15 billion, and it is once again seeking international assistance—this time a $1.3 billion loan from the International Monetary Fund (IMF)—to stabilise its fragile economy.

Pakistan’s economic trajectory, which showed promise in the early years post-independence, has been marred by chronic instability. While neighbouring India invested in long-term development and democratic institutions, Pakistan has endured repeated military interventions, political upheavals, and a persistent focus on regional antagonism.

In 2023, Pakistan narrowly avoided a sovereign default with a $3 billion IMF bailout. However, its dependence on external financing remains acute, with current efforts underway to secure an additional $1.3 billion under a climate resilience facility.

The convergence of political instability, financial fragility, and the international fallout from its internal security policies has left Pakistan teetering on the edge of economic collapse. With investor confidence dwindling and key financial indicators in freefall, the country now faces the daunting task of steering away from a deepening economic and political crisis.


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