Pakistan’s $3tr dream at risk amid population, climate pressures

December 02, 2025 (MLN): Pakistan’s vision of becoming a three-trillion-dollar economy by 2047 could remain elusive unless urgent action is taken to tackle rapid population growth and escalating climate challenges.

Without strategic interventions, these twin pressures could significantly hinder long-term economic progress.

Finance Minister Senator Muhammad Aurangzeb highlighted these concerns at the Pakistan Population Summit 2025 in Islamabad.

He also emphasised that sustainable growth will require coordinated efforts from the government, private sector, and civil society to address demographic and environmental challenges.

Aurangzeb said recent flooding is expected to shave 0.5% off GDP this year, warning that climate-driven losses are already eating into economic gains, according to the press release. 

Population pressures, he added, continue to dilute the effect of headline growth, with higher output failing to translate into real improvements when measured against the pace of demographic expansion.

The minister said Pakistan has long recognised the scale of its population problem but still lacks effective implementation.

He noted that the task now is to move beyond policy discussions and create operational plans that can be backed through budgets and long-term planning.

He linked this challenge to the climate agenda, where technical ministries propose policy but finance ministries drive mainstreaming through resource allocation.

Aurangzeb drew attention to the scale of human development deficits. Around 40% of children under five face stunting, a crisis he described as “intellectual poverty” that weakens future economic competitiveness.

He said rising urbanisation has created pockets of acute deprivation, where inadequate water, sanitation and hygiene deepen stunting and health risks.

He also called learning poverty among girls a major barrier to labour force participation, echoing global evidence that female economic participation boosts growth.

The minister said Pakistan’s youth population 64% of the country remains a potential demographic dividend, but only if skills, nutrition and early-life development challenges are addressed.

He pointed to growing activity in Pakistan’s digital and freelance economy, including AI, blockchain, Web 3.0 and global crypto participation, and said these sectors will shape future jobs rather than government employment.

He stressed the need for regulation that protects digital workers and supports innovation.

Aurangzeb acknowledged multilateral financing commitments tied to population and climate outcomes.

He cited the World Bank’s Country Partnership Framework, which includes a ten-year, $2bn annual envelope linked to targets on stunting reduction, early-grade learning and climate resilience.

He said Pakistan must now prepare investable projects to fully access this support.

The minister also highlighted pressure on public finances. He said the federal government and provinces jointly funded this year’s flood rescue and relief operations without making external appeals, arguing that Pakistan cannot rely on international borrowing for every crisis.

He said upcoming NFC Award discussions will require consensus on including population as a core factor in horizontal distribution.

Aurangzeb said future development financing must shift to outcome-based models.

He pointed to the Social Impact Financing Framework and the upcoming Pakistan Skills Impact Bond, developed with support from the British Asian Trust and technical assistance from the FCDO, as early steps towards tying public resources to measurable results.

He noted growing engagement from religious scholars who have clarified misconceptions about population management, calling their participation essential for consensus building.

He also acknowledged the Dawn Media Group for elevating public discourse on climate and population challenges.

Aurangzeb said the government will rely on expert inputs from the two-day summit as it works to embed population and climate considerations into economic planning, arguing that the country’s growth path depends on addressing both risks with urgency and coordination.

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