Overview
Climate change continues to wreak havoc in Pakistan, with its effects increasingly evident during the monsoon season. This year’s floods bring haunting reminders of the catastrophic 2022 monsoon season—Pakistan’s worst on record. Millions still struggling to recover from that disaster have been further set back by this year’s floods, and unlike the 2022 floods, this year’s disaster has affected an even broader swathe of the country, including Punjab province, a critical agricultural hub for Pakistan. As a nation heavily reliant on agriculture—the sector accounts for roughly 24% of its GDP and employs half its labor force—Pakistan’s cash-strapped economy now faces significant risks, with limited ripple effects—such as supply chain disruptions—for the regional and global economy.
Three Years After the 2022 Floods: The 2025 Monsoon Season
The 2022 monsoon season marked the worst flooding in Pakistan’s history. Between June and August 2022, flash floods, overflowing rivers, and landslides submerged nearly one-third of Pakistan. More than 33 million people were directly affected, claiming over 1,700 lives and displacing approximately eight million, and 10% of the country’s health facilities were either damaged or destroyed at a time when millions required urgent medical assistance. Over 700,000 homes were destroyed, with 40% of bridges damaged or obliterated, alongside significant road infrastructure failures across the country.
The floods also placed immense pressure on Pakistan’s already-fragile economy. Estimates indicate the catastrophe cost the country $14.9 billion in damages, $15.2 billion in economic losses, and $16.3 billion in rehabilitation and recovery expenses. Reports revealed the floods directly raised the national poverty rate by 4.0 to 4.3 percentage points, pushing nine million more people into poverty and deepening existing disparities. By August 2022, inflation soared to 27% while net foreign reserves dropped to $8 billion. Pakistan narrowly avoided default in 2022 by securing $1.17 billion in financial assistance from the International Monetary Fund (IMF) which released funds originally part of a 2019 government bailout loan that was held up after Pakistan did not meet the IMF’s energy demands.
Just three short years later, Pakistan has been struck by another wave of relentless monsoon rains, causing flash floods, landslides, and river overflows across the country, devastating both urban and rural areas. As of September 8, 992 people have lost their lives, with nearly half of the deaths attributed to flash floods, followed by house collapses and drowning. While Pakistan has experienced heavier rains during past monsoon seasons, this year’s downpours have been incredibly abrupt and violent—made even more unpredictable and deadly by climate change, which amplifies risks for the already vulnerable country. The country is reporting that for the first time, weather patterns originating from the east, south, and west are all converging over Pakistan at the same time, intensifying weather conditions to unprecedented levels.
Moreover, Pakistan’s Punjab province has been hit by its worst floods in decades, receiving 26.5% more monsoon rain in July and August than the previous year. The situation has been aggravated by river overflows, as India released water from its upstream dams to manage its own heavy monsoon rains. The additional inflows surged through the Sutlej, Ravi, and Chenab rivers, inundating low-lying regions in Pakistan and forcing mass evacuations. Pakistan’s Punjab has recorded the second highest death toll after Khyber Pakhtunkhwa, and more than two million people have been displaced as water levels reached historic highs. With water levels still critically high in the three rivers, Pakistan’s southern Sindh province is expected to receive a downstream surge before emptying into the Indian ocean. With the monsoon season expected to last until the end of September, the risk of further devastation remains acute.
Economic Aftershocks of the Floods
Pakistan’s economy, which had been making progress toward macroeconomic stabilization and projected gradual GDP recovery, will be set back by the summer’s intense monsoon season. The country’s agricultural sector has already taken a massive hit, with major shocks likely to be felt across the economy. Agriculture accounts for around 24% of Pakistan’s GDP and employs 40% of its workforce. Punjab, Pakistan’s most populous province and home to nearly 128 million residents, forms the backbone of the country’s agricultural economy, producing key staples such as wheat, rice, and sugar.
The floods are estimated to have devastated around 1.84 million acres of Punjab’s farmland, including 60% of its rice crop, 35% of its cotton, and 30% of its sugarcane. Nationwide, agricultural losses are estimated at more than 302 billion rupees (nearly $1.1 billion USD), with livestock losses adding an additional 500 million rupees (nearly $1.8 billion USD). Basmati rice has been hit especially hard, with at least 20% of the crop damaged. Severe shortages of animal fodder could further affect dairy production in the months ahead.
With fear of food shortages looming, prices of essential commodities including wheat, tomatoes, and onions have already surged by at least 10%, and could rise further if Sindh faces similar devastation. Crop damage is often more severe in Sindh, where floodwater typically stagnates for extended periods. During the 2022 flood, Sindh received 450% more rain than normal and nearly four-fifths of all its crops were damaged. Prolonged disruptions to supply chains could push inflation higher, while damages to processing facilities may add further pressure. Furthermore, with a substantial segment of the population reliant on agriculture for their livelihoods, income interruptions will persist until the next planting cycle—potentially pushing many deeper into poverty, especially those still recovering from the 2022 floods.
The economic toll is also expected to weigh on external accounts: Pakistan’s trade deficit could widen by an estimated $1.9 billion in FY2026 as export losses in textiles, rice, and sugar are projected to reach $861 million. Meanwhile flood-driven cotton shortages may compel Pakistan to increase imports of textile inputs, a move that risks straining foreign reserves that have only recently shown signs of recovery and disrupting the country’s dynamic value chain that spans from cotton ginning to finished products. This disruption would impact countless livelihoods.
With textiles and apparels accounting for roughly 60% of Pakistan’s exports, the floods risk a severe blow to foreign trade. Although Pakistan ranks among the top ten global textile exporters, it accounts for less than 2.3% of global textile trade, with its exports peaking at just $19.3 billion in FY2021-2022. Despite an ambitious target to double exports to $40 billion by FY2024-2025, the sector struggles with persistent energy crises, outdated technology, and limited value addition. Flood-induced cotton shortages could further isolate Pakistan from international supply chains, allowing competitors like China and India to capture its market share. Similarly, Pakistan’s leather industry, the second-highest export earner, contributes about 5% to the country’s total exports and is valued at over $800 million. However, Pakistan’s presence in the global leather sector remains modest, and any retreat from the market due to flood-related disruptions is unlikely to have a significant impact internationally.
Agriculture, specifically rice and cotton, is Pakistan’s fourth largest export. Pakistan and India are the only two countries that exclusively grow Basmati rice, with Pakistan controlling 35% of the global Basmati market. When India pulled out of global markets by banning the export of non-Basmati white rice in July 2023, Pakistan quickly captured its market share. Although India lifted its ban in late 2024 and reentered the market with competitive pricing, demand for Pakistani Basmati rice from the EU, China, and the Middle East remained strong. The EU signaled an increasing preference for Pakistani Basmati rice. With the recently imposed 50% tariff on Indian exports to the US, Pakistan eyed to increase its rice exports to the US to 100,000 metric tons this year, up 20,000 tons from the year before.
However, while this opportunity exists, the on-ground realities caused by the floods may impede its ability to fully capitalize on it. Flood-driven rice shortages may force international markets to revert to purchasing Indian Basmati rice and other varieties, while simultaneously driving up global rice prices. To counter this, Pakistan might concentrate its limited rice exports to the US, seeking to capture the market share India has more-or-less lost due to the imposed tariffs. However, such a strategy would not entirely mitigate the broader challenges of Pakistan’s overall rice production and export capacity constrained.
Widespread infrastructure damage will also take a toll on logistics and supply chains. Transportation services have faced setbacks, with railways in Punjab suspending operations in several areas due to damage to tracks. Meanwhile, many households remain without electricity due to massive hits to the electricity supply infrastructure. This year’s flooding has once more shed light on the country’s electricity sector’s vulnerability to climate-related events—the 2022 floods damaged transmission networks across the country and took months of phased restoration to resume normal operations. Prolonged outages and severe infrastructure damages risk transport bottlenecks, disrupting business returning to normal.
Challenges to Recovery
The 2022 floods underscored the devastating consequences of extreme weather events, with lessons that remain relevant in 2025. The World Bank estimates Pakistan will require $348 billion in by 2030, with $152 billion toward adaptation and resilience strategies and $196 billion toward reducing CO2 emissions across all sectors of the economy. Yet this year’s flooding highlights the nation’s competing fiscal priorities: Despite mounting climate risks, Pakistan raised defense spending by 20% for the 2025–2026 fiscal year, citing ongoing tensions with India in May, while cutting its overall federal budget by 6.9%. Notably, funding for the Ministry of Climate Change suffered significant reductions.
While the government has approved relief packages and secured international aid from the EU, Asian Development Bank, and United Nations, heavy reliance on external funding carries considerable challenges. After the 2022 floods, less than half of the $11 billion pledged by foreign donors materialized, hindered by Pakistan’s inability to develop sustainable, investable projects. Six months later, millions remained without access to clean water, food insecurity persisted at alarming levels, and critical infrastructure repairs lagged behind. Meanwhile, Pakistan continues to appeal to the global community for expedited disbursement of the Fund for Responding to Loss and Damage (FRLD), established at COP28 to assist developing and least developed countries (LDCs) in addressing the impacts of climate change. However, the FRLD remains severely underfunded, and US withdrawal from its governing board earlier this year delivers a troubling signal to LDCs of the fragility of international climate commitments.
Pakistan’s vulnerability to future extreme weather events influenced by climate change—including both intensified droughts and floods—remains acute. These events represent a growing threat to the millions reliant on agriculture for their livelihood, leaving the population vulnerable to prolonged economic instability and widespread hardship. The cumulative impact of displaced populations, destroyed farmland, decimated livestock, and ruined infrastructure risks impeding economic recovery and causing fiscal pressure. Pakistan’s downside climactic risks, if not adequately managed both at home and by coordinated efforts within the international community, may constrain political agendas, hamper the country’s economic growth, and reduce geopolitical agency.
