Escalating Indo-Pak Tensions Threaten Pakistan's Economic Stability: Moody's Report
The ongoing tensions between India and Pakistan could disrupt Pakistan's access to external financing, adversely affecting its foreign exchange reserves, warns Moody's. While India's macroeconomic conditions remain stable, persistent confrontations and defense spending might challenge its fiscal strength.
- Country:
- India
Moody's latest report highlights escalating tensions between India and Pakistan as a significant threat to Pakistan's economic stability, potentially hindering its access to external financing and adding pressure on its foreign exchange reserves.
The report indicates India's macroeconomic stability, driven by strong investment and consumption, remains largely unaffected by these tensions, given the minimal economic ties with Pakistan. However, increased defense spending could impact India's fiscal strength.
The geopolitical risk assessment foresees periodic military flare-ups but predicts that these will not lead to extensive military conflict. The recent downgrading of diplomatic ties by India following a terror attack has further strained relations, impacting treaties and Pakistan's resources.
(With inputs from agencies.)
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