Pakistan’s economic crisis impacts the shipping sector

Pakistan Navy soldiers guard a Chinese container ship at Gwadar port in November 2016. Image: Pixa.

9 February 2023

Weak governance and political instability contributed to the crisis, causing investor confidence to drop and corruption to rise. More protests and blockades are expected in the coming months, leading to business disruptions and shipping delays.

By Katie Zeng Xiaojun, North, South and Central Asia analyst

Pakistan is facing a severe economic crisis. Its economy is on the verge of collapsing due to a political crisis, a depreciating Pakistani rupee and inflation at decades-high levels, devastating floods, and a significant shortage of energy. Weak governance and political instability have been contributing factors to the crisis which led to weakening investor confidence, increased corruption and pork-barrel politics. Pakistan has also been highly dependent on its import sector, particularly energy imports, which made the country vulnerable to soaring gas and oil prices.

In December last year, hundreds of demonstrators who protested outside the Port of Gwadar became violent, leading to clashes with the police. After almost two months of sit-ins in various parts of town, as part of the Haq Do Tehreek (Gwadar Rights Movement), a protest movement that began in November 2021, they gathered at the port’s entrance and the East Bay Expressway, a highway that leads to the port. They halted the flow of supplies and movement between the port and the naval bases on Koh-e-Bateel by blocking both points. Most of them belonged to local fishing communities. The protesters have been demanding a reduction in security checkpoints, an end to deep-sea fish trawling, which they allege has depleted their catches and an easing up on the curbs on informal border trading with Iran.

A crackdown by the police led to the arrest of over 100 people, including several members and leaders of the movement, along with tear gas canisters and rubber bullets used to disperse the crowds. Dozens were injured and a young police constable died due to his injuries. In the following days, there were raids on the houses of people associated with the movement. A curfew was imposed in Gwadar after the crackdown.

Since then, the government imposed Section 144 under the penal code of Pakistan to prohibit public gatherings and sit-ins in the city for one month. The crackdown was also followed by an internet blackout for two weeks, and phone networks were shut down for one week, affecting business operations in the city.

After the government gave in to the demonstrators’ demand, Gwadar is slowly returning to normalcy and the port has restarted operations. It had since received government imports of bulk cargo. Port workers have also started loading and unloading wheat trucks. Shops and business centres started reopening and traffic was restored between the port city and Karachi as well as other areas.

The country is still unstable at the moment. Further demonstrations, including sit-ins, street marches, and additional blockades, are expected in the coming months. Enhanced security measures, such as road closures or temporary restrictions on public movement, cannot be ruled out. Business disruptions and shipping delays are likely to occur.

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