Pakistan’s economic resilience is right now being tested not just by global headwinds but by homegrown climatic volatility. A severe drought gripping the country, particularly in Sindh and Balochistan, has depleted reservoirs to “dead” levels just as the kharif season begins, driven by nearly 40–50% rainfall deficits since late 2024. At the same time, a delayed but potentially punishing monsoon looms, promising both too little and too much rain in erratic bursts. Together, these extremes threaten a key pillar of Pakistan’s growth: agriculture, which contributes roughly a quarter of GDP and employs over a third of the workforce.
Agricultural growth in the first half of FY25 was barely 0.9%, a sign that climate stress has taken hold.
The drought has already inflicted tangible damage. Wheat output is projected to fall by around 11% in 2025 to approximately 27.9 million metric tons, upending expectations set earlier in the year. Concurrently, crop yields for rice, sugarcane, and cotton are also under pressure, while livestock productivity is dwindling as herders struggle with water scarcity and forage shortages. The World Bank reports that agricultural growth in the first half of FY25 was barely 0.9%, compared with multi‑percentage trends of previous years, a sign that climate stress has taken hold.
These agricultural setbacks reverberate far beyond rural fields. With industry stagnating and services sectors similarly lackluster, overall economic growth hovers near 2.5–2.7% for FY25, well below government aspirations. Lower farm incomes mean reduced consumer spending and declining rural tax contributions; growing subsidies and food imports to fill the supply void are corroding public finances just as debt remains elevated.
Monsoon volatility compounds these vulnerabilities. A delayed onset, now likely after June 27, heightens the risk of flash flooding, soil erosion, and waterlogging, all of which damage standing crops and infrastructure. Erratic precipitation patterns also disrupt planting schedules, complicating logistical planning and supply chains. For a country prone to the extremes of both drought and flood, like in 2022’s catastrophic inundations, climate risk is existential for food security and economic stability.
The fiscal consequences are immediate. Irrigation subsidies and targeted relief will be necessary to cushion the rural poor against rising food prices and income loss. At the same time, with inflation already rebounding, these expenditures risk crowding out development outlays or forcing borrowing. Policymakers must grapple with a harsh paradox: support for farmers is indispensable for social stability, but overextending fiscally erodes the macroeconomic gains won under IMF-supported reforms.
Support for farmers is indispensable, but overextending fiscally erodes macroeconomic gains.
Looking ahead, Pakistan must confront the structural fragility of its agricultural sector. Investment in climate-resilient infrastructure, dam rehabilitation, check dams, water harvesting, and drip irrigation cannot remain aspirational. The stalled Cholistan Canal Project reflects a broader resistance to large-scale public schemes, yet as reservoir levels fall and rain patterns shift, such investments may soon become unavoidable. At the same time, strengthening weather forecasting, early warning, and insurance mechanisms would help farmers adapt and governments plan more effectively.
But adaptation alone is insufficient unless accompanied by fiscal and policy reform. Agricultural pricing, subsidies, and crop insurance need redesigning to incentivize sustainability and productivity. Meanwhile, diversifying rural incomes through agro-processing, off-farm employment, and cash transfers can improve resilience and reduce exposure to climatic shocks. Without structural change, every drought or flood will cyclically set back growth.
Pakistan’s path forward must embed climate risk into its economic architecture. Doing so means integrating water and land management into federal and provincial development plans, conditioning subsidies on climate-smart practices, and ensuring that the costs of maladaptation, reliance on groundwater, and floodplain cultivation don’t fall on future generations. Multilateral support and technology transfer will be crucial, but the political courage to implement often-unpopular reforms, the reallocation of water, farm pricing reforms, and the enforcement of land zoning will be decisive.
Every drought or flood will cyclically set back growth unless structural change occurs.
In the end, the interplay of drought, monsoon volatility, and agriculture now defines Pakistan’s economic baseline. If the country emerges with durable policy changes, improved climate resilience, and a modernized rural economy, growth could pivot from reactive cycles to steady gains approaching its 4% aspiration for FY26. But failure to address these vulnerabilities risks trapping Pakistan in a pattern of stagnation, crisis-driven policymaking, and fiscal fragility. The costs of inaction are no longer hypothetical.
Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.
