The State Bank’s recent economic outlook report confirms the risk posed to Pakistan by external factors such as the international upheaval caused by US President Donald Trump’s tariffs.

The report notes that Trump’s tariffs have the potential to worsen critical risks that could jeopardise the country’s medium-term economic outlook. As the tariff sage unfolds — then folds back before unfolding again, depending on who had Trump’s ear on the day — it highlights the intricate interplay of global trade disruptions and commodity price volatility driven by ongoing global tensions.

With uncertainties stemming from reciprocal tariffs and fluctuating geopolitical landscapes, Pakistan’s economy is at a significantly increased risk of struggling as demand for our exports declines amid the expected global economic downturn.

Meanwhile, agriculture has been shaky this year, with unfavourable weather conditions lowering yields, and some farmers going on poorly thought-out planting decisions, which may exacerbate the food situation in the country.

We would also be remiss in ignoring the additional risk presented by ongoing tensions with India, which the State Bank could not factor into its projection. Even if tensions are resolved and the temperature lowered without a military conflict, investors around the world will not be reactive to pouring money into companies that could face severe disruptions due to security events.

This situation spells trouble for the broader economy since agricultural performance has historically played a vital role in shaping Pakistan’s overall economic health. In fact, large-scale manufacturing, which is a key part of the transition to a modern economy, may even decline.

And while remittances have shown steady and reliable growth, the money is not transmitted in a vacuum. Economic downturn in countries with large overseas Pakistani populations could take a heavy toll on these workers’ incomes, which would translate into a significant drop in remittances.