Debt-Ridden, Pakistan Tests Missiles, Disregards Moody’s Major Economic Risk Warning!

Two missile launches in 48 hours raise regional fears; Moody’s warns standoff could derail Pakistan’s fragile recovery

May 6, 2025 | As tensions between India and Pakistan intensify following the April 22 Pahalgam terror attack, Pakistan has test-fired two surface-to-surface missiles in quick succession — a move that has raised both geopolitical and economic alarms.

Also Read: Centre Orders Security Drills Nationwide Amid Rising Indo-Pak Tensions — First Since 1971

The missile launches — of Fatah (120 km range) and Abdali (450 km range) — were conducted over the weekend, according to Pakistan’s military. Prime Minister Shehbaz Sharif praised the successful tests, asserting that “Pakistan’s defence is in strong hands.”

Also Read: Putin Condemns Pahalgam Terror Attack, Reaffirms Russia’s Support for India’s Fight Against Terrorism

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💣 Tensions Escalate After Kashmir Attack

• The missile tests follow India’s accusation that Pakistan was behind the Pahalgam terror attack, which killed 26 Hindu pilgrims.
• Pakistan denies involvement, but claims to have intelligence suggesting that India may be preparing a military strike.

Also Read: India Accelerates Dam Projects After Indus Treaty Suspension: Reservoir Flushing, Six Hydel Projects in Focus

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📉 Moody’s Issues Grim Economic Warning

In a stark assessment, Moody’s Investors Service warned that continued military escalation could seriously destabilize Pakistan’s already fragile economy, stating:

“Sustained escalation in tensions with India would likely weigh on Pakistan’s growth and hamper fiscal consolidation, setting back progress toward macroeconomic stability.”

Key concerns raised by Moody’s:

• Slowed economic growth
• Strained foreign reserves
• Reduced access to foreign funding
• Risk to debt repayment capacity

Pakistan had recently secured a $7 billion IMF bailout, which had offered temporary economic breathing room. The current standoff, however, threatens to undo that progress.

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🇮🇳 India’s Economy Unlikely To Be Impacted – For Now

• Moody’s noted that India’s economy is expected to remain relatively insulated due to limited trade links with Pakistan.
• However, it warned that a rise in defence spending could complicate India’s fiscal management goals.

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🌍 Diplomacy in Motion: Iran Steps In

In a bid to de-escalate the situation, Iran’s Foreign Minister has arrived in Islamabad and is expected to visit New Delhi later this week to mediate talks.

Meanwhile, Pakistan has announced plans to formally approach the UN Security Council, calling for international intervention to maintain peace.

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🏷️ Tags:

India Pakistan tensions, Pakistan missile test, Moody’s Pakistan economy warning, Fatah missile, Abdali missile, Pahalgam attack, Indo-Pak conflict, IMF Pakistan loan, PahalgamTerrorAttack,