Widespread flooding triggered by heavy monsoon rains has dealt a significant blow to Pakistan’s fragile economic recovery this year, with initial damage estimates reaching Rs. 409 billion ($1.4 billion), roughly equivalent to 0.33% of GDP.
According to a report issued by Arif Habib Limited, the severest economic impact has been felt in the agriculture sector, which absorbed nearly three fourths of the total losses and suffered damages surpassing Rs. 302 billion. This year’s flooding has once again exposed the sector’s deep vulnerability to climate shocks, jeopardizing both food security and rural livelihoods at a critical time for the economy.
“The timing is particularly delicate,” notes the report. “Pakistan’s economy had begun to show encouraging signs of stabilization in 2025. Yet the unfolding floods add a fresh layer of uncertainty that could stall momentum across multiple sectors,” it warns.
Economic impact
In the agriculture sector, losses totaling Rs. 302 billion, or 0.24% of GDP, include widespread crop damage and livestock deaths. These losses threaten the country’s food supply chain and the income of millions of rural households.
The transport and communication sector has suffered estimated losses of Rs. 97.6 billion, or 0.08% of GDP. These highlight the destruction of critical infrastructure like roads and bridges, disrupting connectivity, delaying relief efforts, and impeding goods movement.
The floods and rains have also damaged housing to the tune of Rs. 8.95 billion. Nearly 9,000 homes have been damaged or destroyed, primarily in Khyber-Pakhtunkhwa and Azad Jammu and Kashmir.
Reported losses of livestock stand at a relatively small Rs. 0.5 billion, but the social and economic impact remains meaningful in rural areas, where animals serve as financial lifelines.
While the combined 0.33% of GDP figure appears modest in macroeconomic terms, the Arif Habib report cautioned that this is only an early estimate. “As both direct and indirect repercussions become clearer in the days ahead, the final damage estimate is likely to be higher,” it added.
Rising human cost
This year’s prolonged monsoon season is ongoing, with floodwaters currently passing through Punjab and reaching Sindh. According to the National Disaster Management Authority (NDMA), the country has recorded 854 deaths, including 484 in KP and 209 in Punjab. Sindh has reported 58 fatalities so far, though officials warn this number could climb as the floodwaters enter the southern province.
Around 9,000 homes have been damaged or destroyed, and 6,000 livestock animals perished. These figures, while significantly lower than the 2022 floods that saw 1,735 deaths, 2.3 million homes destroyed, and 1.2 million livestock lost could rise as the situation continues to unfold.
What comes next?
The full scope of displacement and damage is still being assessed, but analysts warn the floods could trigger a chain reaction of economic disruptions ranging from slowed GDP growth and higher inflation to increased fiscal pressure on relief and reconstruction spending.
“Historically, such disasters have undermined agricultural output, inflated food prices, and derailed growth momentum,” warns the report. “The risks are real, and the recovery path could face fresh hurdles if the rains persist.”