Published: 08:14 PM, 03 June 2026
Wars Abroad, Poverty At Home: How Global Conflict Threatens Pakistan’s Most Vulnerable
"Wars may be fought elsewhere, but their economic consequences are felt most acutely by those far removed from the frontlines, making the real test how effectively Pakistan can shield its most vulnerable citizens from global shocks"
“Every gun that is made, every warship launched, every rocket fired”, Eisenhower in his famous Iron Cross speech warned, “is a theft from those who hunger and are not fed.” History, sadly, has proven him right. The consequences of war are rarely confined to the battlefield. The true cost transmits far beyond it, upsetting markets, households, and the daily lives of those far removed from the frontlines.
The 2026 Iran War is no exception. IMF projections reveal a 0.2–0.3 percentage point reduction in the projected global growth. This roughly amounts to an estimated $200–300 billion loss in global output in 2026 alone. More alarmingly, the UN warns that the conflict could push more than 30 million people back into poverty worldwide. For countries like Pakistan, already grappling with fragile economic recovery and rising poverty, such shocks present profound policy challenges.
The country today stands at a delicate strategic crossroads. On one hand, in an increasingly volatile region, it has played a constructive role in diplomatic efforts and de-escalation. Its own economy, on the other hand, remains exposed to the shocks that global conflict generates. These pressures affect the entire country; however, it is the 29 per cent of the population living below the poverty line that remains most vulnerable.
In recent years, this vulnerability has markedly deepened. Poverty in the country has sharply risen from 21.9 per cent in 2018–19 to 28.9 per cent in 2024–25, with rural and urban poverty climbing to 36.2 and 17.4 respectively. This is not just a statistical increase. It translates into the reversal of fragile economic gains. Millions of households have slipped back into poverty while many more now linger above the threshold, increasingly exposed to even minor economic shocks.
The underlying vulnerability is perhaps the most concerning. Sustained inflation, even before the current geopolitical tensions, had already eroded real incomes. Recent poverty estimates (2024–25) indicate that while nominal earnings may have increased, in real terms, households have been able to afford less, leaving them with little cushion against further shocks. Real income, for instance, has declined from Rs 35,454 in 2018–19 to 31,127 in 2024–25, reflecting a steady erosion in purchasing power.
Furthermore, this erosion of purchasing power is not evenly distributed. It is precisely here that the risks from global conflict become more pronounced. Poorer households disproportionately spend a large share of their income on food, energy, and transport. This makes them far more exposed to price shocks. Any conflict-induced rise in fuel and food prices, therefore, will translate directly into strained household budgets, forcing difficult trade-offs between basic needs such as nutrition, education, and healthcare. Particularly for the rural population, where poverty is already higher, and income buffers are limited, these pressures could intensify even further.
The current situation becomes particularly precarious, for these vulnerabilities have been shaped by earlier waves of global economic stress, including commodity price surges, exchange rate pressures, and supply disruptions. The implication is clear for Pakistan: the country is not entering this period of geopolitical turmoil from a position of strength. Rather, it is already carrying the economic scars of past shocks, leaving it more susceptible to the fresh wave of global instability.
The ongoing tensions in the Middle East risk exacerbating the core determinants of poverty. Sustained disruptions to energy markets could further push oil prices upwards, with cascading effects on transport costs, food prices, and overall inflation. Early price trends already point in this direction, with inflation rising from 5.8 per cent in January 2026 to 10.9 per cent by April. As highlighted in the PIDE’s recent policy viewpoint, Pakistan After the Ceasefire: Gains, Vulnerabilities, and the Policy Agenda, even under de-escalation scenarios, Pakistan remains exposed to oil price volatility and fiscal pressures, underscoring how quickly external shocks can translate into domestic economic strain.
This reality calls for a shift in policy thinking. Foreign policy and domestic economic management can no longer be treated as separate spheres. When global conflict directly shapes inflation, incomes, and poverty at home, economic resilience must become a central component of strategic policy.
The priority must be the protection of the most vulnerable. Targeted cash transfer programmes, particularly those embedded within Pakistan’s existing social protection framework, need to be strengthened and made responsive to inflationary surges. Temporary relief measures during periods of rising food and fuel prices can help cushion the immediate impact on low-income households.
Second, there is a need for more active monitoring and management of essential commodity markets. While price controls remain blunt instruments, improved coordination across supply chains, especially for staples such as wheat, edible oil, and fuel, can help reduce volatility and prevent sudden price spikes that disproportionately affect the poor.
Third, policymakers must move from reaction to anticipation. Developing an “economic shock preparedness” framework linking global indicators such as oil prices and commodity trends to pre-defined domestic responses can significantly improve the speed and effectiveness of policy interventions. This becomes critical in an environment where external crises rapidly transmit into domestic economies.
Finally, the broader objective must be to build structural resilience. Reducing dependence on imported energy, strengthening agricultural productivity, and improving the efficiency of public spending are long-term imperatives. In a world of recurring external shocks, these are no longer developmental aspirations; they are economic necessities.
Pakistan’s role in regional diplomacy may well enhance its international standing. But that standing will be difficult to sustain if domestic economic pressures continue to intensify. Stability abroad cannot substitute for stability at home.
The lesson is clear. Wars may be fought elsewhere, but their economic consequences are felt most acutely by those far removed from the frontlines. For Pakistan, the real test is not only how it navigates geopolitical complexity, but how effectively it shields its most vulnerable citizens from its fallout.
Written by: Sohaib Jalal (The author is an Assistant Registrar at the Pakistan Institute of Development Economics ,PIDE).
>> Source: Friday Times
