The Economic Affairs Division (EAD) has warned that a renewed escalation between the US and Iran could severely impact Pakistan's economy through increased energy costs, inflation, higher external financing needs, and slower growth.

During a meeting with the National Assembly Standing Committee on Economic Affairs, the EAD highlighted that the recent Middle East conflict and temporary closure of the Strait of Hormuz disrupted global energy markets, leading to higher oil prices and supply chain issues.While oil prices have moderated post-ceasefire, regional uncertainties remain.

The committee expressed concerns over the Lyari Elevated Freight Corridor (LEFC) project's cost estimates, noting the proposed financing with the Korean Exim Bank could double the National Highway Authority's estimate.

They urged the government to explore cost-effective options and address funding gaps in the Karachi Greater Water Supply Project (K-IV), which has only received Rs10 billion against its Rs78bn requirement.The EAD emphasized the need for a financially prudent model to ensure project viability and timely completion.