The Pakistan Stock Exchange (PSX) witnessed a sharp decline on Thursday, with the benchmark Karachi-100 index dropping over 2% following India’s decision to suspend the Indus Water Treaty. The move, announced in response to the Pahalgam terror attack, has intensified geopolitical tensions between the two nations, triggering panic among investors.
The Karachi-100 index fell by 2,565 points in early trading, marking one of its steepest intraday declines in recent months. The market later recovered some losses but remained volatile, reflecting investor concerns over the economic impact of India’s diplomatic measures.
India’s suspension of the Indus Water Treaty, a historic water-sharing agreement between the two countries, is expected to have significant repercussions for Pakistan’s agriculture and energy sectors. The treaty governs the distribution of water from the Indus River System, which is crucial for irrigation and hydropower generation in Pakistan. Analysts warn that disruptions to water flow could affect crop production and electricity supply, further straining Pakistan’s fragile economy.
In addition to suspending the treaty, India has also closed the Attari-Wagah border, revoked visas for Pakistani nationals, and expelled Pakistani defense officials from New Delhi. These measures have added to the uncertainty surrounding Pakistan’s economic outlook, with the International Monetary Fund (IMF) and Asian Development Bank (ADB) recently lowering Pakistan’s GDP growth forecast for 2025.
Market experts suggest that the Karachi-100 index could face further volatility in the coming days as investors assess the long-term implications of India’s actions. The situation remains fluid, with diplomatic responses from both nations likely to shape the economic landscape in the region.
Stay tuned for more updates on global markets and geopolitical developments.
