Afghanistan Delivers Big Jolt To Pakistan, Destroys Pakistani Economy With A Single Decision

Lahore: Ever since its blood soaked creation, Pakistan has harbored a single dream - how to destroy India. While that dream remains unfulfilled, a friend of India has begun to dismantle Pakistan's economy. In a major economic blow to Pakistan, Afghanistan has rapidly shifted its transit trade away from Pakistani routes. According to media reports, Afghanistan-Pakistan transit trade plummeted to just US$367 million in the last fiscal year, a stark contrast to the US$5 billion figure recorded in 2021.

What does the report say?

In a detailed report published on Sunday, the 'Dawn' newspaper revealed that transit trade between the two nations shrank to just 11,592 containers in the 2025-26 fiscal year (FY-26). This marks one of the steepest declines recorded in recent years. The report clarifies that this downturn had already begun prior to Pakistan closing its border with Afghanistan in October 2025 on security grounds.
In fact, the period just before the Taliban returned to power was a golden era for transit trade between the two countries. Transit traffic stood at approximately 60,500 containers in the 2017 fiscal year (FY-17) and rose to nearly 89,000 containers by FY-21. During this period, the trade value reached approximately US$5 billion. Notably, this growth occurred despite strained political relations between Pakistan and the Ashraf Ghani administration.
At that time, Kabul maintained Pakistani ports (Karachi and Gwadar) as the primary routes for its international trade. Afghan importers continued to utilize these ports, allowing goods to be transported at lower costs and helping to keep inflationary pressures in check. Even after the Taliban assumed power, an initial improvement in trade was observed; in FY-23, container traffic rose to 102,886, and the total value of cargo reached US$6.7 billion. However, a sudden decline set in thereafter. Volumes dropped to 54,114 containers in FY-24 and fell further to 42,959 containers (with a total value of $1.36 billion) in FY-25.

What are the reasons for the decline?

According to trade analysts, while the border closure in October 2025 certainly accelerated the decline, the downturn is the result of a pre-existing strategy adopted by Kabul. Afghanistan rapidly shifted towards Iranian routes (including Chabahar Port) and reduced its reliance on Pakistani ports. This shift is primarily attributed to Afghanistan's long-term strategy to decrease its dependence on Pakistani ports. Security concerns, frequent border disputes, and allegations that Pakistan supports the TTP (Tehrik-i-Taliban Pakistan) have also hastened this process.

What is the impact on both countries?

Pakistan has suffered direct economic losses due to this decline. Revenue from transit trade, port charges, the transport business, and related jobs have all been affected. On the other hand, Afghanistan is also paying a price for this shift. Transportation and logistics costs have risen because Iranian routes are longer and more expensive, a burden that falls directly on Afghan consumers. This has increased inflationary pressure, particularly in eastern and southern Afghanistan. Pashtun-majority areas, which have long relied on Pakistani goods and cross-border trade, have been the most severely affected.
According to the report, reduced commercial activity has led to job losses on both sides of the border and impacted household incomes. Militant violence and unrest continue in Pakistan's border provinces, further exacerbating the situation. Since the ceasefire ended in November 2022, Pakistan has accused the TTP of launching attacks from Afghan soil.

What happens next?

The report states that Afghanistan-Pakistan transit trade has moved rapidly away from its peak levels. This decline began prior to the 2025 border closure and is likely to persist due to a rapid shift towards alternative routes for Kabul. Experts believe that unless an atmosphere of trust is established between the two nations and substantive discussions take place regarding security and economic cooperation, restoring this trade to its previous levels will be difficult. Currently, this is proving to be a significant strategic and economic loss for Pakistan, while Afghanistan is actively strengthening new supply chains.