Turkiye’s Erdogan, Pakistan’s Sharif discuss boosting cooperation in defense, energy, infrastructure

Prime Minister Muhammad Shehbaz Sharif meeting with Turkish President Recep Tayyip Erdogan (right) in Istanbul on 25 May 2025. (PMO)
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Updated 25 May 2025
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Turkiye’s Erdogan, Pakistan’s Sharif discuss boosting cooperation in defense, energy, infrastructure

  • Sharif is visiting Iran, Azerbaijan, Tajikistan and Turkiye on five-day regional diplomacy visit
  • Ankara openly supported Pakistan in recent military confrontation with archrival India

ISLAMABAD: Pakistan’s Prime Minister Shehbaz Sharif met Turkish President Tayyip Erdogan in Istanbul on Sunday and said the two countries would strive to boost economic cooperation, particularly in defense production, energy, IT, infrastructure development and agriculture.

Sharif reached Istanbul on Sunday as the first stop in a five-day regional diplomacy tour that will also see him visit Iran, Azerbaijan and Tajikistan.

Ankara expressed solidarity with Islamabad in a military standoff with India earlier this month when the two nuclear-armed neighbors traded missile, drone and artillery strikes for days, killing around 70 people on both sides. A ceasefire was reached on May 10. 

Ankara also maintains cordial ties with India but after Erdogan’s expression of support for Pakistan in the recent conflict, Indian grocery shops and major online fashion retailers have boycotted Turkish products. Indian travel firms have also reported drop in Turkiye bookings over Pakistan support.

A statement released by Sharif’s office after delegation-level talks with Erdogan said the PM expressed “heartfelt gratitude” to the government and people of Turkiye for its support during the conflict with India, the worst between the two nations in decades. 

“Emphasizing the need to further strengthen economic cooperation, particularly through joint ventures and enhanced bilateral investment, the prime minister highlighted key sectors including renewable energy, information technology, defense production, infrastructure development, and agriculture as areas of mutual interest and potential,” the statement said. 

The two leaders also followed up on the implementation of key decisions taken during the 7th session of the High-Level Strategic Cooperation Council held in Islamabad on Feb. 13. 

“Both sides agreed to take steps for achieving 5 billion USD annual bilateral trade target as agreed earlier by the two leaders,” the statement from Sharif’s office said. 

Erdogan’s office said he told Sharif it was in the interest of Turkiye and Pakistan to increase “solidarity” in education, intelligence sharing and technological support in the fight against terrorism.

Erdogan spoke by phone with Sharif on May 7 to convey his solidarity after India first hit Pakistan and Azad Kashmir with missiles. Leaders from the two nations had several contacts subsequently and it is widely believed that Turkiye played an important role, besides the US, UAE and Saudi Arabia, in convincing India and Pakistan to back off and agree to a ceasefire. The two nations have strong ties, both being largely Muslim countries and sharing historical links.

Bitter rivals India and Pakistan have fought three wars, including two over the disputed region of Kashmir, since gaining independence from British rule in 1947. Both claim the Himalayan territory in its entirety but rule it in part. They both acquired nuclear weapons in 1998.


Majority market participants expect no rate change ahead of Dec. 15 Pakistan policy meeting – survey

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Majority market participants expect no rate change ahead of Dec. 15 Pakistan policy meeting – survey

  • Topline survey finds 70% expect State Bank to hold interest rate at 11%
  • Analysis cites flood-driven inflation risk, rising imports as key reasons for caution

ISLAMABAD: Most financial market participants expect Pakistan’s central bank to keep its benchmark interest rate unchanged at 11% when it meets on December 15, according to a new survey by brokerage Topline Securities.

Pakistan’s State Bank has held rates steady since May and maintained the same stance in October, its fourth consecutive pause, after recent floods had a milder-than-expected impact on crops and inflation. The central bank said earlier that the effects of previous interest rate cuts were still filtering through the economy, meaning businesses and consumers were still adjusting to cheaper borrowing. Because of that, the bank felt it was better to keep policy steady for now instead of cutting rates again.

The latest Topline poll reflects that sentiment, with investors largely expecting the bank to hold until inflation pressures ease more decisively. Pakistan has reduced rates sharply over the past 18 months — from a peak of 22% in 2024 to 11% at present — but policymakers have warned that price risks could rise again as imports pick up and agriculture recovers.

Topline said 70% of market participants expect no change, while 30% foresee a cut of 25–100 basis points. No respondents expect an increase despite one member of the SBP board having voted for a rate hike during the September meeting, according to published minutes.

“Continuation of status quo opinion in majority of the participants is driven by floods, higher inflation expected in the second half of FY26, and base effects,” Topline said in its note summarizing the poll.

The brokerage added that lowering rates too soon could encourage non-oil imports at a time when Pakistan is trying to consolidate gains in foreign exchange reserves and keep the balance of payments stable. Price pressure is expected to sit above the central bank’s medium-term 5–7% target range for several months before easing next fiscal year.

Yields in the secondary market also point to stability. Six-month treasury bills are trading near 10.97%, almost unchanged since October, while the six-month interbank benchmark stands at 11.16%.

Pakistan raised its GDP outlook in October to the upper half of its 3.25–4.25% projection range for fiscal year 2026, citing better crop output and improvements in industrial demand. 

The central bank expects reserves to rise to around $15.5 billion by the end of 2025 and close to $17.8 billion by June 2026, assuming planned inflows materialize.