Pakistan's Trade with Gulf Countries Drops Nearly 10% as Kabul Suspends Ties

Pakistani media have reported a sharp decline in the country's trade levels in recent months, indicating an intensifying economic crisis and eroding trust from trading partners.

The Dawn newspaper reported that Pakistan's exports and imports with Gulf countries decreased by nearly 10 percent in the past month of the current calendar year. This drop occurred even as trade relations with Afghanistan and Central Asian countries had already faced serious challenges.

Kabul has suspended all trade dealings with Pakistan, citing the political and instrumental use of economic relations. It has also closed Pakistan's transit route to Central Asia, delivering a heavy blow to the transit-dependent Pakistani economy.

Economic experts point to a combination of factors, including political instability, the army's prominent role in economic decision-making, declining international trust, internal insecurity, ongoing conflicts, rupee depreciation, rising inflation and an energy crisis, as reducing foreign investor interest.

Pakistani traders and farmers have criticized government economic policies, stating that disruptions in exports and lack of suitable markets have led to a large volume of agricultural products, especially fruits and vegetables, spoiling and causing huge losses this year. Analysts note that the greatest pressure falls on farmers in Khyber Pakhtunkhwa and Balochistan provinces, whose economies depend heavily on agriculture and trade across the Durand Line and with Afghanistan.

The decline in trade with Middle Eastern countries has raised concerns about Pakistan's depleting foreign reserves, given that a significant portion of its foreign currency earnings comes from exports to Arab markets. Experts warn that continuation of this trend could lead to a deeper economic crisis, higher unemployment and further devaluation of the national currency.