'Can’t Cover Our Expenses': The Real Crisis Driving Pakistan's Iran Peace Push

Last Updated:April 21, 2026, 17:24 IST

Pakistan’s economy depends heavily on imported oil and gas, making it vulnerable to external shocks.

Rising fuel prices, power cuts, and soaring import costs are putting severe pressure on Pakistan’s fragile economy, as the country steps into a high-profile diplomatic role seeking to mediate tensions between the United States and Iran.

The economic strain, driven in part by instability linked to the US-Israel war on Iran, has led to rolling blackouts, higher transport costs, and growing frustration among businesses and households struggling to stay afloat.

“We can’t cover our expenses, and neither do we have the income to be able to pay our workers’ salaries," Sheikh Nadeem, a bedding store owner in Islamabad, told AFP.

Pakistan’s economy is heavily dependent on imported oil and gas, and officials fear that prolonged instability in the Middle East could push its fragile recovery off track. Petrol prices have already risen by more than 14 percent, while authorities have imposed rolling blackouts to conserve gas.

ALSO READ: How Much Is Iran War Costing And How Many Lives Could That Money Have Saved Instead?

“When petrol goes up, everything becomes more expensive," said Waqar Saleem, a day labourer at a shoe store in Islamabad. “Flour, sugar, everything. When we go to get vegetables they tell us that freight transportation is closed."

Economic analyst Khurram Husain said electricity shortages were the most serious concern. “This is the real crisis," he said, pointing to the impact on both households and industry.

Inflation stood at 7.3 percent in March, according to official figures, but many Pakistanis say the cost of living remains painfully high after years of double-digit price rises. Around 29 percent of the population lives in poverty.

While the government has spoken of economic stabilisation, many citizens say recovery has not translated into real relief. “They say that our country is going towards prosperity, but we do not see it," said Saleem.

A senior economic official, speaking anonymously, said the country remained stuck in a cycle of weak growth and heavy debt under its IMF programme. The International Monetary Fund has already downgraded Pakistan’s 2026 growth forecast, citing global uncertainty.

Small businesses are among the hardest hit. Sheikh Nadeem said he had been covering losses himself for months. “For the last year I have been paying out of my own pocket, how much longer can I go on like this?" he asked.

In Islamabad’s markets, shopkeepers say they are working “hand to mouth", earning daily just to survive.

Muhammad Ahsan, who runs a small jewellery kiosk, said the uncertainty was unbearable. “If this goes on for another two or four months then our entire business will be finished," he said. “We are hand-to-mouth people."

(With inputs from AFP)

News world 'Can’t Cover Our Expenses': The Real Crisis Driving Pakistan's Iran Peace Push

Read More