Pak-Afghan Border Closure Poses Potential Economic Challenges

Islamabad: The suspension of trade between Pakistan and Afghanistan, which began on October 10 due to escalating border tensions, threatens to create significant economic repercussions for both nations if the situation remains unresolved through the end of 2025, according to an assessment by JS Global. While the trade disruption constitutes a minor setback for Pakistan, with an estimated loss of $150 million in exports over three months, the impact on Afghanistan could be considerably more severe given its reliance on Pakistan for a substantial portion of its trade.

Talks aimed at reopening the border have yet to yield results, leading to concerns about prolonged economic strain, particularly for Afghanistan. The country depends on Pakistan for 41% of its exports and 14% of its direct imports, excluding transit trade. Afghan industries and markets could face mounting challenges if the border remains closed.

For Pakistan, while the overall trade impact might seem limited, specific sectors may encounter more pronounced difficulties. Companies such as PABC, FCCL, and CHCC are expected to feel the brunt of disruptions in exports and coal imports, should the trade halt persist through the current quarter.

The ongoing situation underscores the importance of diplomatic negotiations and the possibility of international intervention to facilitate a resolution. Economic analysts emphasize the urgency of reopening trade routes to prevent further economic fallout and stabilize regional trade dynamics.