New Delhi, May 7 (IANS) Operation Sindoor deepened Pakistan’s economic stress in 2026, with investor sentiment, tourism, the aviation sector and exports emerging as major casualties of the military initiative, a report has said.

The report by Greek media house Greece City Times said the May 2025 military operation raised inflation, slowed growth, eroded confidence and worsened the country’s already fragile macroeconomic fundamentals.

It intensified uncertainty for an economy already grappling with high debt obligations, external financing pressures, weak foreign exchange reserves and dependence on multilateral assistance.

The report further stated that investor sentiment was an early casualty as sovereign risk perceptions rose, delaying investment decisions, which raised insurance and borrowing costs.

Operation Sindoor eroded confidence and likely forced many investors into a wait-and-watch mode.

In 2025, the country faced recurring fiscal deficits, a narrow tax base and high debt-servicing costs.

“Household purchasing power had already been eroded by inflation in previous years. GDP growth had also stagnated at around 3 per cent on average over the last three years, reflecting weak industrial momentum, subdued investment, and limited productivity gains,” it noted.

The tourism industry bore the brunt of the military operation as international travellers cancelled plans, hitting hotels, restaurants, tour operators and local communities dependent on tourism income. Aviation, already grappling with structural and financial stress, was another casualty of Operation Sindoor.

“Any disruption in connectivity raises costs not only for airlines but also for exporters, importers, and passengers. Cargo delays are particularly damaging for time-sensitive sectors such as textiles, perishables, pharmaceuticals, and light engineering goods,” the report said.

Trade confidence weakened as international buyers diversified sourcing to Bangladesh, Vietnam and India, the report added.

Operation Sindoor also rekindled inflationary pressure as Pakistan’s consumer price inflation is estimated to rise from 4.5 per cent in 2025, to 7.2 per cent in 2026 and further to 8.4 per cent in 2027.

—IANS

aar/ag