Impact of High Oil Prices on Pakistan’s Economic Growth

This paper discussed the impact of higher oil prices on the Pakistan’s economy during 1990 to 2008. Pakistan is not oil producing rather oil-importing country. An increase in oil price leads to inflation, increase budget deficit and puts downward pressure on exchange rate which makes imports more expensive. The rising oil prices are the major concern for all the developing economies and Pakistan is suffering from it too. The increase in oil price has further effect the daily consumption pattern of households badly. This study analyzes that, how change in real crude oil price effects the real GDP positively and many other factors differently. For example, a lower government spending, a higher real stock price and a lower interest rate would raise real output for Pakistan.