Pakistan Better Positioned to Withstand Global Economic Challenges: Moody’s

ISLAMABAD: Pakistan’s economy is in a stronger position to withstand global economic challenges, with improved economic stability, lower inflation, a more stable exchange rate and stronger foreign exchange reserves providing greater resilience.

Moody’s Assistant Vice President Grace Lim, in her analysis of Pakistan’s economy, said the country was better positioned to face external challenges compared with the situation during the 2022 oil crisis.

According to Lim, the impact of the Strait of Hormuz crisis on Pakistan is expected to be lower than the impact witnessed during the 2022 oil crisis, reflecting the improvement in the country’s economic position over the past two years.

She said Pakistan had achieved greater economic stability during the last two years, placing the economy in a better position to deal with global challenges.

Lim identified lower inflation and a stable exchange rate as key strengths of the Pakistani economy, while a significant improvement in the country’s foreign exchange reserves was providing additional economic buffers.

The Moody’s official said Pakistan was better prepared to deal with global and regional economic challenges, adding that improved economic stability had strengthened the country’s capacity to withstand external pressures.

The assessment comes against the backdrop of heightened global and regional economic challenges, including risks arising from international commodity markets and energy prices.

According to Lim, the progress made by Pakistan over the past two years has improved the economy’s ability to absorb external shocks. The strengthening of key economic indicators has provided the country with greater room to manage potential pressures compared with previous periods of vulnerability.

Lower inflation, a more stable exchange rate and improved foreign exchange reserves are particularly important for Pakistan given the economy’s exposure to external financing requirements and international commodity prices.

The improvement in foreign exchange reserves, in particular, is providing a buffer against external pressures and enhancing the economy’s capacity to respond to potential global disruptions.

Lim reiterated that Pakistan had achieved economic sustainability over the past two years and was now better prepared to confront global and regional challenges.

The assessment by Moody’s highlights the progress made in stabilising Pakistan’s economy while underlining the improved resilience of the country’s external position.

With economic stability strengthened over the past two years, Pakistan is now considered better placed to manage external shocks than it was during the 2022 oil crisis, according to the Moody’s assessment.