Pakistan is facing an unprecedented economic crisis as catastrophic monsoon floods, a first of their kind in decades, have hit both its rural farmlands and industrial hubs. The floods, which began with record monsoon rains in late June and were exacerbated by dam releases from India, have submerged vast areas of the country, leading to billions of dollars in economic damage and threatening the nation’s fragile recovery.
The floods have taken a severe toll, with at least 1,006 deaths reported since June. Over 2.5 million people have been evacuated from the hard-hit provinces of Punjab and Sindh, which are vital to the Pakistani economy.
Impact on Agriculture and Food Supply
The agricultural sector has been particularly devastated. In Punjab alone, a key producer of rice, cotton, and maize, the floods have submerged 1.8 million acres of farmland. The chairman of the Pakistan Farmers Association, Khalid Bath, estimates that 50-60% of cotton and maize crops have been destroyed. Another expert, Iqrar Ahmad Khan, former vice chancellor of the University of Agriculture Faisalabad, estimates that a tenth of the country’s total crops have been lost, with some districts seeing more than 90% of their vegetable crops wiped out.
The timing of the floods is especially alarming as they occurred just before the sowing of wheat, a staple crop that accounts for nearly half of Pakistan’s caloric intake. This raises serious concerns about impending food insecurity and higher prices.
Blow to Industrial and Economic Recovery
The floods have also struck key industrial cities, including Sialkot, a major hub for textiles, sporting goods, and surgical equipment. The inundation of farmlands is expected to have a ripple effect on industries. For example, the severe cotton shortfall will directly impact the textile sector, which is the nation’s top foreign exchange earner.
This disaster comes at a precarious time for Pakistan’s economy, which was in the early stages of stabilization under a $7 billion International Monetary Fund (IMF) bailout. The government had initially projected a 4.2% GDP growth for 2026, driven by growth in farming and manufacturing. However, with the full extent of the damage still unknown, officials and analysts warn that the economic impact could be even greater than the devastating floods of 2022.
Pakistan’s planning minister, Ahsan Iqbal, acknowledged that the floods would “set back” GDP growth. The central bank also warned of a “temporary yet significant supply shock.” Former finance minister Hafeez Pasha has estimated that the floods could increase the country’s current account deficit by $7 billion, stating they are “worse than the previous floods.”