SBP report says Pakistan faces above-average climate losses, long-term GDP risks

KARACHI: Pakistan has experienced climate-related disasters at a rate higher than both global and regional averages over 2000-2024, as well as during the previous two decades, according to a detailed assessment included in the State Bank of Pakistan’s half-yearly economy report.

The central bank’s report said Pakistan is in a particularly difficult position because it is among the countries most exposed to climate risks despite contributing only a small share to global greenhouse gas emissions. At the same time, it must expand its economy and raise growth while lowering the emissions intensity of that growth.

“This is indeed a daunting challenge, considering that decoupling of GDP growth,” the SBP report said referring to this challenge.

The report cited World Bank 2022 estimates showing that Pakistan’s gross domestic product could decline by 4.5 to 6.5 per cent by 2050 under an optimistic climate scenario, while the loss could widen to 7 to 9 per cent in a pessimistic scenario. It identified agriculture and industry as the sectors most exposed to climate-related damage.

If climate action is delayed, output in both agriculture and industry could fall by as much as 17 per cent by 2050. It also said climate stress in Pakistan is becoming increasingly visible through rising temperatures, irregular rainfall, sea level rise and rapid glacial retreat.

The SBP report noted that climate-related damage can intensify in a nonlinear way when multiple hazards reinforce one another, such as heavy rainfall following a heatwave while glacial melt is also underway.

Global losses and Pakistan’s exposure

Between 1995 and 2024, more than 9,700 climate events worldwide caused direct economic losses of around $4.5 trillion in real terms, affected 5.7 billion people and led to more than 832,000 deaths.

Pakistan ranked as the 15th most affected country from climatic events during 1995-2024. Climate disasters caused economic losses of $29.3 billion to Pakistan during 1992-2021, citing IMF 2025, while the 2022 floods alone resulted in damage of around $28bn.

Emissions profile and development challenge

The world’s 10 biggest greenhouse gas emitters account for about 70 per cent of total global emissions, while Pakistan contributes only 1 per cent. Pakistan’s per capita emissions are low, placing it 147th globally.

At the same time, Pakistan’s emissions intensity, measured as greenhouse gas emissions per unit of GDP, remains relatively high despite some improvement over time. It placed Pakistan 20th in global greenhouse gas emissions, compared with 45th in nominal GDP rankings.

“Nearly 54pc of total global GHG are contributed by the top 4 emitting economies in 2024,” the report further stated.

According to the SBP, Pakistan’s total emissions have risen significantly since the 1960s, with the energy and agriculture sectors acting as the main contributors. Population growth, rising incomes and the relatively high carbon intensity of energy are driving increases in carbon dioxide emissions from the energy sector.

The report warned that Pakistan’s high emissions intensity could lead to a material increase in overall emissions if the economy continues along a conventional development path.

Targets and policy steps

Under the Paris Agreement, Pakistan has pledged to reduce greenhouse gas emissions by 50 per cent by 2035 compared with the Business as Usual scenario. The country has launched several initiatives toward that goal, including the 10 billion tree tsunami and mangrove conservation and restoration efforts.

The SBP report also said Pakistan has emerged as a global leader in rooftop solar, with capacity expanding by nearly twenty times between 2022 and 2024, citing Schumer et al., 2025.