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Published : 23 Jun 2026, 05:03 PM
Pakistan's role in brokering a peace deal in the Iran war has led to widespread diplomatic acclaim that could bring Islamabad some economic benefits, but analysts question whether such gains can help resolve the fault lines in its economy.
Prime Minister Shehbaz Sharif and army chief Field Marshal Asim Munir attended talks between Iran and the US in the Swiss town of Bürgenstock last weekend, the culmination of Pakistan's months-long role in one of the world's most consequential diplomatic negotiations.
"This guy. What's up, man?" US Vice-President JD Vance said upon seeing Munir in the resort town before giving the army chief a hug.
Both sides, along with several world leaders, have thanked Islamabad for helping ease a conflict that could have disrupted the Strait of Hormuz for a long period, choked global oil supplies, and shattered the world economy.
The breakthrough has raised Pakistan's profile, and analysts say the country of 250 million people has an opportunity to convert that goodwill into some gains for an economy marked by decades of boom and bust. But they said any benefits were unlikely to fix deeper structural issues, including social and economic inequity, a narrow tax base, and repeated IMF bailouts.
Pakistan is targeting economic growth of 4 percent and inflation of 8.2 percent for the coming fiscal year, compared with 3.7 percent projected growth in fiscal 2026, which ends in June, and 6.7 percent average inflation in the July-May period of the outgoing year.
"A nation that delivers stability at home and helps advance stability abroad becomes a more credible destination for investment," said Khurran Schehzad, adviser to Pakistan's finance minister.
"A growth-oriented economic agenda, coupled with a reputation as a force for peace and stability, places Pakistan in a uniquely favourable position to attract investment into its people, infrastructure, technology and future growth sectors."
Many analysts are expecting some largesse from the US, although there have been no signs of any such windfalls yet.
Alex Vatanka of the West Asia Institute says Pakistan stands to gain from the "huge potential to be a more integrated part of the broader West Asia," eventually forging regional partnerships that could encompass economics and defence alike.
Another possibility was that sanctions relief on Iran could allow "huge trade between Iran and Pakistan," particularly through their Balochistan land border, said Miftah Ismail, a former finance minister.
After 9/11, siding with Washington unlocked debt rescheduling, IMF support, and US assistance. Pakistan had every opportunity to turn that into lasting growth, but structural weaknesses got in the way.
Khurram Husain, an economic commentator and journalist, said the current situation was similar to post-9/11, but with one crucial difference: that moment came at "the start of a long ruinous war in which Pakistan had to play a frontline role," while this time "Pakistan is playing the role of a peacemaker."
That distinction means Pakistan's leverage this time comes from being useful to multiple sides simultaneously — Washington, Tehran, Gulf states, Turkey and China.
Former finance minister Ismail said the diplomatic role had enhanced Pakistan's international prestige, but that had no effect on the high costs, weak exports, and external repayments that keep it dependent on the IMF.
"Our house is in such disorder that foreigners can't really help us unless we help ourselves," he said. "Nothing here in this war changes that, and we will be continually dependent on the IMF."
Asim Ijaz Khawaja, a professor at Harvard University and director of the Harvard Center for International Development, said Pakistan should resist short-term financial concessions that do not raise productivity.
Instead, he said, Pakistan should seek academic exchanges and scholarships, preferential market access for textiles and IT services, technology transfer, and green investment frameworks.
Hamish Falconer, Britain's minister for the West Asia, thanked Islamabad for its peacekeeping role during a visit last week and told Reuters the UK saw "huge scope for deepening trade links" with Pakistan and that a British trade minister was expected to visit in the coming months.
Diplomats from two other Western countries have also said their governments are exploring strengthening economic ties following Islamabad's peace efforts. They did not wish to be identified further.
Princeton economist Atif Mian warns that Pakistan should not treat this diplomatic moment as another route to "deposits, rollovers or IMF-style relief."
The real prize, he says, is a "peace pivot" — one built on regional trade, energy links with Iran, and deeper integration with the Gulf and Turkey.
Analysts said any new economic gains would not fix Pakistan’s deeper constraints.
Oxford economist Adeel Malik pulls no punches: "If structural reforms are not implemented, the country is poised for an implosion in the coming decades." Deep-seated grievances among the young and the shrinking middle class, he warns, are building beneath a system that has long protected the elite at everyone else's expense.
