Pakistan Fuel Crisis: Middle East Heat Reaches Pakistan, PM Announces Fuel-Saving Measures The ongoing Middle East crisis has intensified global oil supply disruptions, with Pakistan now facing severe fuel shortages. In response, Prime Minister Shehbaz Sharif has announced a series of measures aimed at conserving fuel, including salary cuts, work-from-home policies, and reduced government spending. The measures were discussed during a meeting with federal and provincial authorities, with Sharif stating that “difficult decisions” were necessary due to the escalating situation. Key steps include a 50% reduction in fuel allowances for official vehicles for the next two months, with operational vehicles like ambulances and public buses exempt. Additionally, 60% of government vehicles across federal and provincial departments will be grounded during this period. Federal and provincial cabinet members will also forgo their salaries and allowances for two months, while lawmakers will see a 25% reduction in pay. Higher-ranking officials earning over Rs300,000 will surrender two days’ salary, which will be allocated to public welfare. However, health and education sector officials are exempt from this cut. The government will also cut non-employee-related expenditures by 20% in the fourth quarter, banning purchases of vehicles, furniture, air conditioners, and other items until June 2026. Foreign travel by ministers and officials is restricted, with exceptions only for “essential” trips. Government offices will shift to teleconferencing and online meetings to save fuel, while official dinners and Iftar parties are banned. Seminars and conferences will be held at government premises instead of hotels. Public sector offices will operate four days a week, excluding the banking sector.#pakistan #iran_war #middle_east_crisis #international_monetary_fund #shehbaz_sharif
Back to the 1970s? Investors brace for a return of stagflation Investors are increasingly concerned that geopolitical tensions in the Middle East could trigger a stagflationary crisis, reminiscent of the 1970s when oil shocks devastated global economies. Rising energy prices, combined with inflationary pressures and growth fears, have created a challenging environment for central banks and markets. The surge in oil prices has become the central issue, with Brent crude surpassing $100 a barrel, marking its largest daily jump since the 2020 pandemic crisis. Prices have climbed 70% since the start of the year, while European gas prices hit a three-year high. Analysts warn that sustained oil prices above $100 could push inflation higher and slow economic growth. A 5% increase in oil prices is estimated to add about 0.1 percentage points to inflation in developed markets, according to Capital Economics. The International Monetary Fund notes that a 10% rise in oil prices could reduce global output by 0.1-0.2%. This situation has placed central banks in a difficult position. Rate hikes to combat inflation risk further stifling growth, while maintaining low rates could exacerbate inflation. Chicago Fed President Austan Goolsbee described the potential scenario as "as uncomfortable as any." Markets now anticipate at least one interest rate hike from the European Central Bank this year, a shift from earlier expectations of rate cuts. Similarly, the Bank of England faces growing pressure to raise rates despite concerns about economic slowdowns. Bond markets have been hit hard as investors flee fixed-income assets, fearing inflation will erode returns. Short-term yields have surged, with British two-year gilt yields rising nearly 50 basis points in a week—the worst sell-off since 2022.#middle_east #brent_crude #austan_goolsbee #european_central_bank #international_monetary_fund
