Time to hold the line

There are moments when the global economy does not collapse but unfolds – like a car crash in slow motion.

What we are seeing today is not a single crisis. It is a combination of pressures building simultaneously: energy, shipping, fertiliser, food, remittances and confidence. When these forces move together, the danger is not an immediate collapse. It is a slow, steady squeeze on everyday life. And in Pakistan, that squeeze is felt quickly.

It starts with oil but does not end there. Rising oil prices dominate the headlines. But oil is only the first link in a longer chain. If tensions disrupt flows through the Gulf, the impact spreads rapidly. Energy becomes more expensive. Shipping costs increase. Fertilizer supply tightens. Food production is affected with a delay. Inflation then follows – not suddenly, but gradually, creeping into everyday life. This is how global shocks move. First quietly, like small ripples, then all at once, like a tsunami.

For large economies, this may mean slower growth. For Pakistan, it means something more immediate a steady erosion of purchasing power. Food becomes more expensive. Transport costs rise. Utility bills remain high. Everyday goods quietly become smaller or more expensive. But incomes do not increase at the same pace. That gap creates pressure. And that pressure is already visible in the lives of ordinary households, where Pakistan is most vulnerable.

The country relies heavily on imported fuel and LNG. Fertiliser prices are tied to global gas markets. Many industries depend on imported raw materials. At the same time, most households already spend nearly all their income on basic needs, rent, utilities, food, education and healthcare. This leaves little to no disposable income for anything else.

In addition to this, millions of families depend on international remittances. This creates an additional risk. If Gulf economies slow down, remittance flows may weaken. For many households, these inflows are not extra income, they are the main source of survival. Any disruption here immediately affects consumption, savings and financial stability.

This is not a typical recession. It is a pressure test, especially for the bottom half of the economy. In times of uncertainty, the instinct is to act strongly: raise interest rates sharply; tighten conditions; try to control everything. But this situation is different. This is largely a supply-side shock. Higher interest rates will not produce more oil, reduce shipping costs or increase fertiliser supply.

What they can do is slow down businesses, reduce employment and weaken demand further. Policy must remain responsible and measured. Businesses need time to adjust, not additional pressure.

This is not a moment for complicated policy. It is a moment for clear and focused action. The first priority is communication. People need clarity. When information is missing, uncertainty grows and uncertainty leads to panic. The second priority is targeted support. Pakistan already has strong systems like NADRA and BISP. These should be used to deliver direct assistance to the most vulnerable households rather than broad, expensive subsidies.

A third priority is managing the risk from remittances. If inflows weaken, the pressure on households and the broader economy can intensify quickly. One practical approach is for the government to temporarily borrow against expected remittance inflows over the next six months, based on historical trends. This can provide short-term liquidity, support currency stability and create fiscal space to protect vulnerable households during the shock.

At the same time, banks must play their role. They should proactively expand working capital lines to help businesses manage higher inventory holding costs and supply chain disruptions, ensuring companies can continue operating despite delays and uncertainty.

Quick, responsible action is critical. This is exactly how Pakistan navigated the Covid shock by taking timely, balanced decisions rather than delayed reactions.

Engagement with international partners is also essential. The IMF must be approached with clarity: this is not a routine economic cycle, but a black swan event driven by external geopolitical shocks.

There must be a mutual understanding on temporary flexibility in programme conditions, allowing space to protect vulnerable households, sustain industry and preserve jobs during this period.

At the same time, this moment should be used to make long-overdue structural corrections. Cutting wasteful expenditure must go hand in hand with accelerating the privatisation or restructuring of loss-making state-owned enterprises, while also exploring opportunities for debt reprofiling to ease immediate fiscal pressure.

It is also an opportunity to move faster on smart, forward-looking policies. For instance, an aggressive shift towards locally produced electric motorbikes, supported by a network of solar-powered charging stations, can reduce the fuel import bill, lower urban noise, and improve the environmental footprint, while creating local industry and jobs.

At the same time, businesses must be kept alive. Simple, temporary relief measures such as an annual rental freeze can help retail businesses survive and protect jobs. Food and fertiliser supply must also be secured early. Food crises do not begin in markets; they begin months earlier in fields. Delays now will show up later as higher food prices. Exports must be protected at all costs. They bring in foreign exchange, support employment, and provide stability in uncertain times.

Another area that requires immediate attention is contractual risk. With global supply chains under stress, Pakistan should be prepared for a rise in force majeure events, where companies or even governments are unable to fulfill contracts due to disruptions beyond their control. This can affect import and export agreements, shipping and logistics contracts, energy supply arrangements, and major infrastructure projects.

Early identification is critical. Both the government and private sector must begin mapping these risks now, reviewing contract exposure, and preparing legal and financial responses. If ignored, these disruptions can quickly turn into losses, disputes and long-term damage to business confidence.

Beyond oil and food, there are less visible disruptions now taking shape and they could make the situation worse. One of these is plastics. Modern life depends heavily on plastic materials, especially those made from oil and gas. When energy markets tighten, plastic supply becomes more expensive and uncertain. This affects everyday life in simple but important ways. 

Packaging for bottled water, beverages, and food becomes more expensive. FMCG companies struggle to source materials. Textile exporters using synthetic fibres face rising input costs. Retailers find it harder to maintain product availability.

The result is familiar: products become smaller, more expensive or disappear altogether. Inflation spreads quietly into daily consumption, the silent thief.

Another critical but often overlooked vulnerability is the disruption in the helium supply chain. It is not widely discussed, but it is essential for many advanced industries and much of the global supply comes from the Gulf. If supply is disrupted, the effects spread quietly but widely. At a high level, this could mean: MRI machines and hospital diagnostics becoming more expensive and harder to operate; slower semiconductor production, leading to shortages of critical electronics; delays in fibre-optics and high-tech manufacturing; bottlenecks in aerospace and defence systems; constraints on data centre cooling, affecting digital infrastructure; and difficulties in operating military- and high-pressure-sensitive testing equipment.

The shortage may not seem critical in daily life – until it is. When an MRI is not available when you need one, or a critical component of an IT system is delayed, causing essential mission-critical networks to shut down, the impact becomes very real.

Policymakers should remain cognizant of this risk and begin identifying alternatives and solutions before supplies reach critically low levels. This is how geopolitical supply chain disruption and crises function. They are not always dramatic, but they are deeply interconnected.

At its core, this is about confidence. If people believe the system is stable, they adjust and learn to navigate. If they believe it is uncertain, they panic. And panic spreads faster than any policy response.

Pakistan cannot control global events. It cannot control oil prices or geopolitical tensions. But it can control how it responds. Staying measured, targeted and focused while protecting the most vulnerable, protecting exports, preserving employment and keeping the economy moving will define the outcome.

Refuse to panic. Communicate clearly. Act early. Remember, in times like these, more is less. Protect the economy.

The author is a business leader and policy advocate focused on export-led growth, employment generation and competitiveness in emerging economies. He can be reached at: [email protected]

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.

Originally published in The News