Updates with detail of Uber's pull-out from Pakistan in paragraph 9

By Ariba Shahid

ISLAMABAD, June 18 (Reuters) - Careem, Uber's ride-hailing arm in the Middle East, will suspend its Pakistan service on July 18, citing economic challenges, rising competition, and capital constraints, ending its core business in a country where it helped pioneer app-based transport nearly a decade ago.

The move underscores strain on Pakistan’s digital economy, as tech firms scale back amid high inflation, weak consumer demand, and tighter global capital flows. It ends a nearly decade-long run for Careem, which launched in 2015 and became a dominant player in app-based mobility.

"This was an incredibly difficult decision," Mudassir Sheikha, co-founder and CEO of Careem, said in a LinkedIn post on Wednesday. "The challenging macroeconomic reality, intensifying competition, and global capital allocation made it hard to justify the investment levels required to deliver a safe and dependable service in the country."

Careem helped normalize digital payments, app-based bookings, and female ridership in Pakistan.

Newer entrants such as Russia-backed Yango and Latin America’s inDrive have expanded in major cities, offering low-cost models.

The decision follows Uber’s exit from Pakistan in 2022.

Pakistan’s startup ecosystem has come under pressure since 2022 as venture funding dried up, inflation surged to a record 38% before falling to 3.5%, and consumption weakened. Startups including Airlift, Swvl, VavaCars and Truck It In have shut down or scaled back.

Globally, firms like Uber, Lyft and Grab have exited unprofitable markets, narrowed focus, or expanded into adjacent services such as deliveries and payments. Rising costs, regulation, and thin margins in emerging markets have added to the strain.

Uber still operates in parts of the Middle East and North Africa but has pulled back from Pakistan in 2024 after announcing an initial exit in 2022.

(Reporting by Ariba Shahid in Islamabad; Editing by Toby Chopra and Chizu Nomiyama )

((ariba.shahid@thomsonreuters.com;))