The sudden shutdown of oil shipments through the Strait of Hormuz sent tremors through global energy markets this summer, reviving memories of the price surge that crippled many economies in 2022. While neighbouring nations scrambled to shore up reserves and renegotiate contracts, Pakistan’s policymakers appeared already primed for the disruption, drawing on a series of fiscal and monetary adjustments made over the past year.
Moody’s analyst Grace Lim says the South Asian country has weathered the Hormuz shock with considerably less strain than it did during the 2022 oil crisis. According to Lim, Pakistan now enjoys a sturdier fiscal position, with higher primary surpluses and a modest improvement in public‑debt dynamics that provide a buffer against external price spikes. The nation’s foreign‑exchange reserves have also risen, limiting the pressure on the rupee that historically amplified import‑price inflation.
The enhanced resilience is reflected in the latest macro‑economic indicators. Inflation, which peaked at over 30 % in 2022, has been nudged down to the high‑teens, and the central bank’s policy rate, though still elevated, has been trimmed in line with the easing of imported‑fuel costs. Growth forecasts have been adjusted upward, with the State Bank of Pakistan projecting a 3.5 % real‑GDP expansion for the current fiscal year, a notable improvement over the contraction feared during the earlier oil shock.
Lim attributes this turnaround to a combination of decisive policy moves and more reliable external financing. The government’s renewed engagement with multilateral lenders, coupled with a series of sovereign bond issuances that attracted regional investors, has secured a steadier flow of hard currency. Moreover, reforms in the energy subsidy framework have curbed the fiscal drain that once made the state vulnerable to sudden oil‑price hikes.
While the global oil market remains volatile and the Hormuz passage could face further disruptions, Moody’s assessment underscores a pivotal shift: Pakistan’s ability to absorb external shocks has strengthened, reducing the likelihood of a repeat of the inflationary surge and growth slowdown that haunted the nation in 2022. The coming months will test whether these buffers can sustain the economy amid continuing geopolitical uncertainty, but for now, the outlook appears markedly more optimistic than it was two years ago.