FT News Briefing Conflict puts Pakistan’s economy at risk
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May 8, 2025 Tensions rise as Pakistan vows to retaliate following India's airstrikes, spotlighting the frail state of its economy. Meanwhile, the US has canceled a rule restricting AI chip exports, stirring new market dynamics. The Federal Reserve maintains steady interest rates amidst these global upheavals. In the tech world, DoorDash's potential acquisition of Deliveroo raises questions about the future attractiveness of the London Stock Exchange and highlights contrasting investor sentiments between the UK and US in tech listings.
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Conflict Risks Pakistan's Economy
- The ongoing conflict with India threatens to destabilize Pakistan's fragile recovering economy.
- Economic uncertainty has led to stock market declines and risks isolating Pakistan from international financial aid.
India Pressures Pakistan Diplomatically
- India uses diplomatic and resource tactics, including withdrawing cooperation from the Indus Water Treaty, to pressure Pakistan.
- It also lobbies financial institutions to review lending to Pakistan over terrorism sponsorship allegations.
Fed Holds Rates Amid Uncertainty
- The Federal Reserve continues holding US interest rates steady amid economic uncertainty and evolving trade policies.
- The Fed is cautious about lowering rates until it sees the impact of tariffs on the economy.