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TMI BlogEscalating tensions would weigh on Pakistan's growth; India to be relatively immune: Moody'sX X X X Extracts X X X X X X X X Extracts X X X X ..... Escalating tensions would weigh on Pakistan's growth; India to be relatively immune: Moody's X X X X Extracts X X X X X X X X Extracts X X X X ..... gh on growth. In its commentary titled 'Escalating Pakistan-India tensions would weigh on Pakistan's growth', Moody's said it does not expect major disruptions to India's economic activity because it has minimal economic relations with Pakistan (less than 0.5 per cent of India's total exports in 2024). On April 22, 26 people were killed after terrorists opened fire on tourists in Pahalgam, Jam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mu & Kashmir. India has identified five terrorists, including three Pakistani nationals, behind the massacre in Pahalgam and has pledged to take action against the perpetrators of the heinous act. "Sustained escalation in 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 macroeconomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c stability," Moody's said. Pakistan's macroeconomic conditions have been improving, with growth gradually rising, inflation declining, and foreign-exchange reserves increasing amid continued progress in the IMF programme. "A persistent increase in tensions could also impair Pakistan's access to external financing and pressure its foreign-exchange reserves, which remain well below what is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to meet its external debt payment needs for the next few years," Moody's said. The Executive Board of the International Monetary Fund (IMF) is scheduled to meet Pakistani officials on May 9 to evaluate a fresh USD 1.3 billion funding arrangement for Pakistan under its climate resilience loan programme. It will also assess an ongoing USD 7 billion bailout package. Sources have said that In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia will be asking global multilateral agencies, including the IMF, to re-examine funds and loans provided to Pakistan. Moody's said the macroeconomic conditions in India would be stable, bolstered by moderating but still high levels of growth amid strong public investment and healthy private consumption. "In a scenario of sustained escalation in localised tensions, we do not expect major disr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uptions to India's economic activity because it has minimal economic relations with Pakistan. However, higher defence spending would potentially weigh on India's fiscal strength and slow its fiscal consolidation," Moody's said. Moody's said its geopolitical risk assessment for Pakistan and India accounts for persistent tensions, which have, at times, led to limited military responses. "We assu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me that flare-ups will occur periodically, as they have (been) throughout the two sovereigns post-independence..., but...it will not lead to an outright, broad-based military conflict," it added. Moody's has a 'Caa2' rating on Pakistan, which means the debt issued by the sovereign is of poor quality with very high default risks. Moody's rates India at 'Baa3', which is the lowest investment-gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de rating. Citing "cross-border linkages" to the April 22 attack, India has promised severe punishment to those involved in the strike. Following the deadly terror attack, India and Pakistan's diplomatic relations have deteriorated. India suspended the Indus Waters Treaty of 1960, which could severely reduce Pakistan's water supply, shut down the only operational land border crossing at Attari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and downgraded diplomatic ties. In response, Pakistan suspended the 1972 Simla peace treaty with India, halted bilateral trade and closed its airspace to Indian airlines. Last week, India imposed a ban on the import of goods originating from or passing through Pakistan, halted the exchange of mail and parcels, and prohibited the entry of Pakistani ships at Indian ports in fresh punitive measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res against Islamabad. Many global powers, including the US and European Union, have called on both India and Pakistan to de-escalate tensions while unequivocally condemning the terror strike. India's exports to Pakistan in April-January 2024-25 stood at USD 447.65 million, while imports were meagre USD 0.42 million. These imports were limited to niche items like figs (USD 78,000), Basil and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osemary herbs (USD 18,856), certain chemicals, and Himalayan pink salt. The imports were USD 2.88 million in 2023-24. PTI JD JD SHW SHW X X X X Extracts X X X X X X X X Extracts X X X X
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