Developed by Globesight, this Country Deep Dive aims to equip policymakers, philanthropic organizations, donors and the private sector with an integrated, up-to-date situational read on Pakistan.
Political-Economic Pulse
- Mounting regional tensions shifted political discourse towards external threats and national security: The India–Pakistan military confrontation in April – marked by retaliatory measures and the suspension of key agreements such as the Indus Waters Treaty – along with ongoing unrest in Balochistan, has shifted Pakistan’s focus toward national security and stability, further sidelining domestic political debate and justifying greater securitization and centralized control through the remainder of 2025.
- With PTI’s political marginalization, ruling authority consolidates power: The PTI remains politically weakened due to leadership imprisonment, judicial setbacks (e.g., loss of reserved seats), and limited space for mobilization. Meanwhile, the ruling PML-N and its coalition partners have tightened their grip on power with institutional backing and a weakened opposition landscape, a trend expected to continue unchallenged in the latter half of 2025.
- IMF backing, FDI and remittances fuel short term optimism amid structural weaknesses: IMF support and external financing have stabilized Pakistan’s macroeconomic indicators. Reserves have improved, inflation has eased, and remittances and FDI – particularly from China – have increased. However, IMF-aligned austerity measures in the FY26 budget have slashed social sector spending. Combined with weak agriculture, low exports, and limited reforms, these factors pose risks to sustained recovery in the second half of 2025.
- USAID cuts and US tariffs risk external dependence and trade fragility: The suspension of USAID funding and uncertainty around US tariffs may disrupt critical development programs and threaten Pakistan’s largest export market. However Pakistan is pursuing key strategies to diversify its bilateral partnerships and sectors despite exposure to geopolitical shocks that may undercut recovery prospects. Negotiations in the second half of 2025 have already yielded reduced tariffs and new agreements, creating opportunities to stabilize external balances and support Pakistan’s economic recovery.
Pakistan’s political trajectory through the rest of 2025 is likely to be defined by an entrenched securitization of governance, as external threats and internal unrest provide cover for the ruling coalition and military establishment to tighten control. With PTI effectively neutralized, the absence of meaningful opposition raises concerns about democratic backsliding, unchecked authority, and the erosion of inclusive governance. Moreover, while IMF-backed support, growing remittances, and selective FDI inflows have provided short-term macroeconomic relief, structural weaknesses continue to pressure livelihoods. Through the end of 2025, Pakistan’s trajectory remains vulnerable to political shocks, climate-driven crises, and uneven recovery momentum.
Priority Sectors
Climate
Pakistan faced repeated climate shocks (droughts, heatwaves, floods) worsening vulnerability and impacting agriculture. Progress was seen in financing tools like green bonds and IMF climate discussions, but adaptation funding and resilience measures remain insufficient.
Agriculture & Food Security
The sector struggled with historic wheat losses of US$7.8 billion (~Rs 2.2 trillion), low FY25 growth, and severe input disruptions. Reforms like wheat market liberalization and digital platforms were introduced, but food insecurity and climate fragility persist.
Women & Gender Equality
There was a significant narrowing of the mobile/internet gender gap (from 38% to 25%) and rollout of programs supporting digital skills, entrepreneurship, and financial inclusion for women. Structural gender inequalities, however, continue to hinder broader progress.
Digital Inclusion
Policy momentum accelerated with the Digital Nation Act, Pakistan Digital Authority, and new digital banking licenses. Yet infrastructure gaps, digital literacy barriers, and gendered access continue to limit meaningful inclusion.
Public Health
Immunization coverage improved (DPT3: 86%) and nutrition programs expanded, but health spending remains under US$10 per capita with high out-of-pocket costs, and polio cases continue to emerge in parts of the country. Grievance redress, primary care access, and system capacity still lag.
Family Planning
Punjab saw a slight decline in fertility and an uptick in contraceptive use. However, reproductive autonomy is still low (33%), pointing to unmet needs in behavior change, service delivery, and rights-based programming.
Domestic Resource Mobilization
The projected drop of 9 to 17% in Official Development Assistance (ODA) globally in 2025 is severely impacting developing countries, including Pakistan. While international partners continue to contribute, the government must significantly increase domestic spending, particularly in the health sector, to reduce external dependence, and safeguard essential services.
Source: OECD
In Focus
Pakistan is making strategic strides toward building a comprehensive Digital Public Infrastructure (DPI) ecosystem, anchored in digital ID, payment systems, and connectivity, but progress is slowed by infrastructure gaps, institutional fragmentation, and digital exclusion.
Source: World Economic Forum
Challengess
Opportunities
Moving Forward
To unlock DPI’s full potential, Pakistan must bridge the implementation gap, address the digital divide – especially for women – and embed long-term institutional coherence. Targeted infrastructure investment and policy continuity will be essential to drive inclusive and sustainable digital transformation.
Way Forward
Pakistan’s political and economic landscape in 2025 has been shaped by mounting regional tensions, domestic opposition suppression, and macroeconomic stabilization efforts driven by IMF support and foreign inflows. While austerity and geopolitical risks pose ongoing challenges, sectoral developments reflect a mix of progress and persistent gaps: climate vulnerability remains high despite new financing tools; agriculture faces major output losses and structural weaknesses; and digital inclusion is gaining policy traction but still hampered by infrastructure and access barriers. Notable strides in narrowing the gender digital divide, expanding health coverage, and promoting digital public infrastructure signal reform momentum, though much work remains to ensure equitable and sustained development outcomes.
Globesight will continue to closely monitor political, economic, and sectoral developments in Pakistan, with a focus on identifying timely opportunities and risks. Our engagement will prioritize building strategic partnerships across high-impact sectors, such as climate resilience, digital inclusion, and gender equality, to drive sustainable change and long-term impact.