Pakistan

GEO-POLITICAL LANDSCAPE

Pakistan, located in South Asia, spans an area of over 800,000 square kilometers, nearly three times the size of Italy. To the south, it is bordered by the Arabian Sea, with a coastline extending approximately 1,000 kilometers. The country shares its eastern border with India, its western border with Iran and Afghanistan, and its northern border with China.
The primary watercourse of Pakistan is the Indus River, which flows through nearly the entire length of the country, passing through all provinces except Balochistan.

The northern territories of Pakistan are home to some of the world’s highest peaks, including K2 in Gilgit-Baltistan.
Pakistan was established as an Islamic Republic after the partition of British India on August 14, 1947. It is a multiethnic and multicultural nation with historical ties to the ancient Indus Valley Civilization, as well as influences from various civilizations, including those of Alexander the Great, Gandharan, and the Mughal Empire. After the secession of East Pakistan (now Bangladesh) in 1971, the country adopted its third Constitution in 1973, which has been amended several times. Notably, the 18th Amendment in 2010 redefined the federal structure and shifted some administrative and sectoral responsibilities to the provinces.

 

 

ECONOMIC AND SOCIAL OUTLOOK

With a growing population of 247 million (World Bank, 2023), Pakistan is the fifth most populous country in the world. It is the 45th largest economy in terms of GDP (World Bank, 2023), approximating to US$375 billion (IMF, 2023).

Among the main sectors of the economy, services account for the largest share of GDP, contributing over 50%. This is followed by agriculture and industry, each contributing between 20% and 25%1. Of these, agriculture saw the most significant growth, with an increase of about 6.5% compared to 2023. This sector accounts for approximately 70% of the country’s exports and provides employment for nearly 40% of the workforce (FAO, 2023), of which about 66% are women (World Bank, 2025).

In 2024, poverty began to rise again, affecting millions of people, particularly in rural areas, where around 60% of the population lives.

This trend is also reflected in the decline of the Human Development Index. According to the latest UNDP report published in 2024, Pakistan ranks 164th out of 193 countries—down from 161st in 2022.

The latest 2024 UNDP report ranks Pakistan at 164th place from among 193 countries, a decline from 161st place in 20222. Moreover, the report states that in 2024, 93 million people were in multidimensional poverty.

At the same time, inadequate water and sanitation services impact 6 million people, heightening the risk of disease. Additionally, 13.5 million people, including 6.3 million children, require social protection to prevent exploitation and economic vulnerability (OCHA, 2024). Education continues to be a significant obstacle to the country’s development. 26 million children are out of school and the literacy rate among children over 10 is 61% (UNESCO, 2024).

The health system is another indicator of the country’s structural difficulties. WHO ranked Pakistan 124th out of 169 for quality of health care, with inadequate services and severely limited access in rural areas (WHO, 2024).
In addition, the migration dynamics of Pakistan are characterized by significant emigration and immigration flows. Remittances by Pakistani workers abroad represent an important economic resource, reaching 20.8 billion dollars between July 2024 and January 2025, an increase of 31.7% compared to the 15.8 billion dollars of the previous year (World Bank, 2025).

It is also to be noted that Pakistan has in recent years witnessed an increase in the number of Afghan refugees, since August 2021.

Pakistan ranks 145th out of 146 countries in the Global Gender Gap Report 2024 of the World Economic Forum, highlighting one of the most serious gender inequalities in the world. This positioning reflects the structural barriers that limit women’s and girls’ access to education, work and justice.

A cross-sectional analysis of the status of women shows that crises affecting the entire population have an even more drastic impact on women, girls and young girls. Gender differences manifest themselves in food insecurity, limited access to health care, economic inequalities and low levels of female schooling.
These vulnerabilities are compounded by forms of gender-based violence10 often due to archaic social dynamics.

CHALLENGES AND ISSUES

In order to promote sustainable development, Pakistan faces structural challenges that limit economic growth and the well-being of its population. Low productivity and poor diversification especially in the agricultural sector, aggravated by inefficient practices and inadequate capacity, undermine the country’s ability to respond to the dynamics of the global economy and the growing impact of climate change. This is being compounded by the rapid depletion of forest and water resources. The World Bank has placed Pakistan among the 10 most vulnerable countries to climate change, with increasingly frequent extreme events that increase food insecurity and economic fragility.

This is because agriculture is being hampered by backward production systems, poor mechanisation and inefficient management of natural resources. With just 4% (World Bank, 2024) of the area covered by forests and an inefficient irrigation system that results in water losses of up to 25%, the sustainability of natural resources is increasingly compromised.Reduced job opportunities amplify these vulnerabilities, with a labour characterised by underemployment and a high incidence of informal employment. Access to stable and decent jobs remains limited, particularly for young people and women, who face structural barriers related to low skills, limited training and socio-cultural obstacles.

STRATEGIC ORIENTATION

In response to these challenges, AICS Islamabad has defined a strategic orientation focused on food security, climate resilience, decent work, and the enhancement of cultural heritage.

As of December 2024, the AICS Islamabad portfolio for Pakistan is worth €174,888,161. Of this amount, 57%—over €100 million—is allocated to ongoing projects. The remaining 43% (€74.4 million) is either classified as pledged funding following the announcement made at the Geneva Conference in January 2023 or is included in the repurposing analysis of residual funds from completed projects.

The entire portfolio comprises 21 projects € 145,059,000 (83%) financed through a combination of grants (off-budget) and soft loans (on-budget). Grants, totaling just under 30 million euros, account for 17% of the overall budget. In contrast, soft loans exceed 145 million euros and represent 83% of the total funding, supporting six initiatives that are either ongoing or in the defining phase (pledged).

Gilgit-Baltistan is the region with the largest share of remaining allocated funds, accounting for 26% of the total, followed by the province of Khyber Pakhtunkhwa with a 9% share. The remaining provinces receive comparatively fewer resources.

AICS Islamabad is committed to advancing the three pillars and four strategic outcomes, with a particular focus on food security, climate resilience, decent work, and the promotion of cultural heritage, in line with the 2030 Agenda and the 2024–2026 Triennial Strategy.

In line with the guidelines of AICS and the Italian Ministry of Foreign Affairs and International Cooperation (MAECI) on Gender Equality and Women’s Empowerment (GEWE) 2020-2024, the Islamabad office integrates a gender perspective into funded initiatives through a twin-track approach. On one hand, AICS Islamabad supports targeted interventions aimed at promoting gender equality and women’s empowerment; on the other, it ensures that gender mainstreaming is effectively incorporated within initiatives with other sectoral focuses.
In interventions where gender equality is a significant objective, it is concretely implemented through expected outcomes, dedicated activities, and specific budget allocations. The criterion of traceability and measurement of the attention given in the interventions supported by AICS in favor of the GEWE is the Gender Policy Marker. In AICS Islamabad’s 2024 portfolio, 13 out of 18 ongoing projects are marked with a Gender Policy Marker 1, indicating that gender equality is a significant objective.

These projects account for over €92 million, representing 93% of the total funding. Under the Prosperity pillar, one of our projects places gender equality at the core of its objectives: “Girls’ Education – Support for the Female Education Sector and Cultural Heritage Conservation through Education in Pakistan”, implemented by UNESCO with a budget of €1.5 million. This initiative aims to promote girls’ education and reduce school dropout rates among marginalized communities. As a result, 8,934 girls from marginalized communities in Punjab, Khyber Pakhtunkhwa, Sindh, and Gilgit-Baltistan have been enrolled in primary school