Operation Sindoor Hits Pakistan Economy Harder, Stress Deepens: Report

New Delhi, May 7 (NewsAlert24x7) – Operation Sindoor, launched in May 2025, significantly exacerbated Pakistan’s economic challenges in 2026, impacting key sectors such as investor confidence, tourism, aviation, and exports, according to a report by Greece City Times.

The military initiative heightened inflation, slowed economic growth, and further weakened Pakistan’s already fragile macroeconomic conditions. The report highlights how the operation intensified uncertainty amid high debt levels, external financing pressures, depleted foreign exchange reserves, and reliance on multilateral aid.

Investor sentiment was among the earliest to suffer, as rising sovereign risk perceptions delayed investment decisions and increased borrowing and insurance costs. This erosion of confidence pushed many investors into a cautious wait-and-watch stance.

In 2025, Pakistan was already struggling with recurring fiscal deficits, a narrow tax base, and high debt servicing expenses. Household purchasing power had been diminished by inflation, while GDP growth stagnated around 3 percent over the previous three years due to weak industrial activity, subdued investment, and limited productivity improvements.

The tourism sector faced severe setbacks as international travelers canceled plans, adversely affecting hotels, restaurants, tour operators, and local economies dependent on tourism revenue. The aviation industry, already under structural and financial strain, also suffered due to connectivity disruptions that increased costs for airlines, exporters, importers, and passengers.

Cargo delays particularly harmed time-sensitive industries such as textiles, perishables, pharmaceuticals, and light engineering goods. The report also noted a decline in trade confidence, with international buyers shifting sourcing preferences toward Bangladesh, Vietnam, and India.

Inflationary pressures intensified following Operation Sindoor, with consumer price inflation in Pakistan projected to rise from 4.5 percent in 2025 to 7.2 percent in 2026, and further to 8.4 percent in 2027.