Moody’s Investors Service has warned that rising tensions between India and Pakistan could derail Pakistan’s fragile economic recovery, intensify external financing pressures, and hinder ongoing fiscal consolidation efforts. Meanwhile, the ratings agency expects minimal impact on the Indian economy but cautioned that a prolonged conflict could have fiscal consequences.
In a report released on Monday, Moody’s said that recent diplomatic and security developments pose significant downside risks to Pakistan’s macroeconomic stability.
“Escalating tensions with India would likely weigh on Pakistan's growth and hamper the government's ongoing fiscal consolidation, setting back Pakistan's progress in achieving macroeconomic stability,” the agency stated.
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