New Delhi: India's tough diplomatic stance and punitive measures have hit Pakistan hard as the stock market crashed over 1,000 points following the terror attack in Jammu and Kashmir's Pahalgam. The benchmark KSE-100 index declined by 1,086.51, or 0.93 per cent, to stand at 116,139.63 from the previous close at 11:13 am.
In a significant escalation of tensions, India has suspended the Indus Waters Treaty (IWT) with Pakistan following a deadly attack in Kashmir’s Pahalgam that claimed at least 26 lives and left 17 others injured. The incident, which targeted tourists in the popular summer destination, has prompted Pakistan to convene a National Security Committee meeting to assess the rapidly deteriorating situation.
The suspension of the IWT, a longstanding water-sharing agreement, marks a sharp diplomatic move and comes amid broader punitive measures by India. These steps are already having an economic impact on Pakistan.
Meanwhile, the International Monetary Fund (IMF) has lowered Pakistan’s GDP growth forecast for the current fiscal year to 2.6%, down from earlier estimates. Growth for the next fiscal year is now projected at 3.6%, with inflation expected to rise to 7.7%.
Adding to the pressure, new trade tariffs imposed on Pakistani goods are expected to hurt the country's key exports. A state-owned think tank has warned that this should serve as a wake-up call for economic diversification.
Meanwhile, investor sentiment has taken a hit, with the benchmark KSE-100 index falling below the 118,000 mark amid rising fears over the geopolitical fallout and Pakistan’s worsening economic outlook.