How TLP blockades and Afghan tensions choke Pakistan’s economic artery

Pakistan stands at a crossroads, facing economic hurdles, internal unrest, and threats from global turmoil and climate change. Supported by an IMF programme and tight monetary policies, the economy has shown signs of stability.

Reports from the State Bank of Pakistan and the ADB (Asian Development Bank) highlight a projected GDP growth of around 2.5 percent to 3.0 percent for FY2025 and a reduction in the current account deficit, which briefly ran a surplus. A significant moderation in the inflation rate has occurred compared to previous record highs. International rating agencies have also upgraded the country’s sovereign ratings, reflecting a reduction in default risk.

While government efforts are starting to bear fruit for citizens, the path to recovery remains precarious. Against this fragile backdrop, new waves of political and security crises threaten to unravel progress and throw daily life into disarray.

These instabilities became starkly evident during the TLP protests that swept across Pakistan in October 2025, bringing the country’s main transport arteries, such as GT Road, to a standstill. Wholesalers and retailers faced swift financial blows, essentials vanished from shelves, and daily wage earners lost their livelihoods overnight. The digital economy also came to a halt as mobile internet suspensions left gig workers without income.

Rising tensions with Afghanistan and the return of the banned TTP group have thrown trade and transport into chaos. Border closures have caused heavy losses for businesses and crippling the trucking industry. The economy is highly sensitive to global dynamics, and ongoing unrest worsens this vulnerability.

Although global inflation has moderated, the country remains exposed to external shocks. Any renewed increase in international oil or gas prices, often triggered by geopolitical events such as the Ukraine conflict or instability in the Middle East, quickly raises Pakistan’s import costs and drives domestic energy inflation.

Given these overlapping domestic and external pressures, despite brighter macroeconomic numbers, persistent political and security risks at home, along with global uncertainty, keep foreign investors at bay. The high country risk premium acts as a barrier, choking off the capital needed for lasting economic growth.

The recent TLP protests and Afghanistan border tensions have rapidly shaken Pakistan’s economic indicators, impacting key sectors and the stock market.

For example, the primary casualty of border tensions is the disruption to bilateral trade, particularly at key crossing points like Torkham, directly hitting local traders and the transport sector.

Historical data show that recurrent border closures significantly undermine trade flows. For instance, an extended closure of the Torkham Gate in early 2025 resulted in a severe trade disruption.

The President of the Khyber Pakhtunkhwa Chamber of Commerce reported an estimated loss of nearly USD 15 million for the Pakistani side due to that specific Torkham Gate closure, with the total financial damage for both countries reaching an estimated USD 25 million over 20 days (GASAM Report, April 2025).

With each flare-up, traders are forced to halt operations, causing import and export revenues for vital goods like cement, rice, pharmaceuticals, and fresh produce to plummet overnight. Industry reported 6,000 trucks remained stranded on both sides of the crossings (GASAM Report, April 2025). This halt in movement results in significant revenue loss for transport companies and truck owners, who also incur costs for idle assets and spoiled cargo.

If tensions drag on or erupt again, the transport and customs sectors along the border could shrink, dealing a heavy blow to local economies that rely on the steady flow of goods. TLP blockades and internet blackouts send shockwaves through urban supply chains, slashing daily wage earnings across the board.

Delayed shipments spoil valuable goods and leave countless labourers jobless overnight. With most workers in the informal sector, these disruptions quickly deepen poverty and economic hardship.

Reports indicate shortages of essential commodities such as wheat flour, sugar, dairy, and poultry in major cities, including Rawalpindi and Islamabad, due to sealed routes (Dawn, October 2025). These shortages enable local grocery shops to raise prices, illustrating micro-level supply shock inflation (Dawn, October 2025).

Manufacturers incur higher production costs from supply chain delays, while retailers experience reduced sales volumes. Disruption of the GT Road, a critical transportation artery, paralyzes the intercity movement of raw materials and finished goods.

Authorities’ practice of suspending mobile internet services to disrupt protests has been documented. Past events show that telecom operators incur an estimated revenue loss of PKR 1.64 billion (USD 5.4 million), with the government losing around PKR 574 million (USD 1.9 million) in tax revenue from service disruption (Al Jazeera, May 2023).

The IT freelance industry, a key source of foreign exchange, reports losing nearly USD 2 million a day during such shutdowns (Al Jazeera, May 2023). This directly halts the income of gig-economy workers (ride-hailing, food delivery) and digital freelancers who are entirely reliant on mobile data for their daily earnings.

The combined instability creates high systemic risk, leading to an immediate bearish pressure on the stock market.

During the recent TLP protests and escalating tensions, the KSE-100 Index faced sharp pressure. In the week ending October 11, 2025, the index dropped around 3.5 percent to close at 163,098 points (Dawn/Arif Habib Limited, October 2025). This was attributed to tensions, instability, and profit-taking (Dawn, October 2025). Negative sentiment led to selling pressure and falls in sectors exposed to logistics and consumption.

The swift market fall and investor flight show how quickly chaos and global threats can undermine stability. Rising uncertainty weakens confidence, halts investment, and threatens reform gains.

In summary, the current situation is a race against time: the economic recovery driven by stabilization reforms is being severely tested and often stalled by cascading shocks from domestic political turmoil (TLP), regional security threats (Afghanistan border/militancy), and external vulnerabilities (global commodity prices and climate change).

Copyright Business Recorder, 2025