As 2025 draws to a close in few days, it is time to reflect back on the chain of events that have shaped the year. Apart from the typical highs and lows – the year saw some unprecedented events that will have a lasting imprint.
In world politics, Pakistan successfully managed its relations with both USA and China. A revival in the US-Pakistan relations was marked with high-level visits and economic cooperation. Pakistan also reinforced its relations with China. Apart from high-level visits, the latter half of the year also saw the launch of second phase of CPEC and Joint Action Plan to enhance political, security, economic, and people-to-people ties. Apart from security cooperation with both USA and China, an important defence agreement has been inked with the Kingdom of Saudi Arabia, reinforcing the bilateral ties. Likewise, Pakistan also signed a USD 4.6 billion deal of JF-17 Thunder fighters with Azerbaijan, diversifying its security partnerships. In addition, the change of leadership in Bangladesh has marked a reset in the bilateral relationship, providing new opportunities to dampen the prior rifts. Overall, it is evident that Pakistan demonstrated a balanced approach in the diplomatic front. In 2026, this trend requires further consolidation with prudent tactical adjustments particularly with respect to middle powers, while adhering to our long-term goals.
In its neighbourhood, Pakistan had turbulent episodes with two wars witnessed on its eastern and western front. The Indian aggression in May unfolded into a full-blown conflict between the two nuclear power states – ending with Pakistan getting a decisive military advantage over India. The historic victory was followed by intense diplomatic measures to project Pakistan’s narrative on international stage. It is to be kept in mind that it is very likely that Indian sabre-rattling and military adventures will continue due to upcoming state elections next year. Pakistan must remain prepared militarily and diplomatically to counter any potential misadventure from the Indian side. There was also a standoff with Afghanistan shortly afterwards. Despite the ceasefire requested by the Afghan side, it is likely that the situation may remain volatile in 2026. Hence, Pakistan must focus on constructive engagement with Afghanistan to address the underlying areas of contention..
The security front presented the foremost and most acute challenge this year. The terrorism trends continued to maintain the upward trajectory. In August alone, 143 attacks made it the deadliest month in a whole decade, notably in Khyber Pakhtunkhwa and Balochistan. In this context, the role of Indian proxies was vivid this year with increased attacks by Fitna-al-Khawarij and Fitna-al-Hindustan. In 2026, a directed focus on addressing internal threats and vulnerabilities, along with addressing external destabilising influences is required.
As far as the economic front is concerned, the economy is expected to grow by 3.5 percent, with inflation expected to be around 7.2 percent. It is noteworthy, that the economic indicators reflected a positive trend with economic recovery and stabalisation – as was expected following the IMF tranche worth USD 1 billion in late 2024. However, the core challenge lies in the lack of adequate reforms, bureaucratic hurdles, excessive regulations and absence of confidence in the system. Without addressing the root cause, any amount of financial capital inflow will not have the needed impact. The existing structural weaknesses have driven financial capital, industries and human resource out of the country. Nearly 615,000 individuals have left the state in the first ten months. Unemployment rate has surged to an all-time high in 21 years (7.1%) across all age groups. It is predicted that nearly 1.4 million youth will be unemployed in the next four years, undermining social cohesion and enhancing public frustration. Hence, there is a dire need to bridge the gap between policy formulation and execution vis-à -vis economic reforms which replace coercive governance with competitive economic models. In this context, taxation should be shifted towards undocumented economy, regulations need to reformed and public-private partnership should be embedded in the financial structure.
On the political front, the ongoing political instability continues to adversely impact policy continuity, governance effectiveness and confidence of international actors. There is a pressing need of cohesive and effective institutions for long-term stability
On the technological front, the launch of three satellites , including the hyperspectral satellite (HS-1) marked a milestone. The associated capabilities must be optimally employed to meet SUPARCO’s vision of transforming into mid-tier space player by 2050. The launch of a federal cybersecurity authority has also been announced this month. The real success lies in integrating the technological advancements with the broader economic and security objectives for long-term gains.
Lastly, the damage done by reoccurring floods, irregular monsoon patterns and urban flooding highlighted the dire need of tackling climate change. Disaster prevention as opposed to disaster management is the crucial via establishing climate-resilient infrastructure, and effective urban planning.
As per Socrates’ famous saying – an unexamined life is not worth living. As we gear up for next year, it is essential to analyse the existing gaps and explore solutions for the future. 2025 presented before us the structural vulnerabilities that exist in our systems on the political, economic and security front. In parallel, it also brought to the fore the resilience embodied in us as a nation. Looking Ahead – 2026 will come with its own set of challenges, opportunities – even unprecedented events. In such scenarios, success will rely on learning from the past, societal cohesion, visionary leadership and national direction.
Shaza Arif is a Senior Research Associate at the Centre for Aerospace & Security Studies (CASS), Islamabad. The Article was first published in The News International. She can be reached at [email protected].
