The economic cost of the 2025 floods is estimated at around Rs409 billion ($1.4 billion), equivalent to 0.33% of Pakistan’s GDP. Agriculture has suffered the most, with losses exceeding Rs302 billion ($1.0 billion), accounting for nearly three-fourths of the total impact and 0.24% of GDP. These are the initial estimates published by brokerage house Arif Habib Limited (AHL).
According to the report, transport and communication sectors also faced substantial damage valued at Rs97.6 billion ($333 million), or 0.08% of GDP, as destruction of roads, bridges, and networks disrupted connectivity, delayed relief efforts, and slowed the movement of goods. Housing damages, though smaller at Rs8.95 billion ($31 million, 0.01% of GDP), affect thousands of households directly. Livestock losses are estimated at Rs0.5 billion ($2 million).
The floods have strained Pakistan’s economic growth. GDP, which grew 6.2% in FY22 and contracted 0.2% in FY23, had rebounded 2.5% in FY24. Pre-flood projections for FY26 estimated growth at 3.4%, but this has now been revised to 3.2% as agriculture’s contribution is projected to fall from 2.2% to 1.1%.
Millions of acres of farmland have been submerged, with Punjab bearing the heaviest losses. Approximately 1.3 million acres of rice, sugarcane, cotton, and maize were flooded along Ravi, Chenab, and Sutlej rivers. Sindh reported nearly 80% of Bahawalnagar’s cotton crop destroyed, while Khyber Pakhtunkhwa saw around 3,200 acres affected in districts including Buner, Battagram, and Swat.
Early assessments suggest agricultural output in affected areas may fall by 15–20%, potentially reducing GDP by 0.5–1.0%. Secondary effects such as soil salinity, irrigation disruptions, and supply chain breakdowns could further raise food inflation by 20–30% and increase import needs for essential commodities by 10–15%.
Crop-specific losses under a 10% damage scenario include sugarcane at 8.0 million tons, cotton at 0.88 million bales, and rice at up to 0.92 million tons. Maize losses are estimated at Rs55.1 billion ($188 million). Livestock losses, though smaller in aggregate, affect rural livelihoods and food security.
The floods are expected to affect Pakistan’s trade balance by around $1.93 billion. Cotton shortfalls may push imports up by 737,000 tons, costing approximately $1.06 billion. Textile, rice, and sugar exports are projected to decline by nearly $861 million combined.
Inflation is likely to face further upward pressure. Items such as meat, rice, vegetables, and sugar, representing around 20% of the CPI basket, have already shown price increases. Preliminary estimates indicate food inflation could rise by 4.3% MoM in September alone, pushing the FY26 CPI forecast to 7.2%, up from a pre-flood estimate of 5.5%.
Reconstruction costs outside agriculture are estimated at $107 billion ($364 million), primarily for roads and bridges. Housing rehabilitation affects nearly 9,000 households. Agriculture support, social transfers, and food subsidies could increase fiscal outlays, necessitating supplementary budgets or external financing.
Despite the floods, the KSE-100 index has remained resilient, rising 23% since June 2025. Short-term declines in offtake are expected in sectors like cement, steel, fertilizer, and automobiles, but reconstruction efforts are likely to support demand and corporate profitability in the medium term. Historical trends suggest recovery in sales and earnings as reconstruction progresses.
