Pakistan’s poverty rate is climbing again, the World Bank (WB) cautioned in a new report released on Tuesday, urging urgent, people-focused reforms to safeguard vulnerable families and revive inclusive growth.
The study “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment” is the first major review of poverty and welfare trends in the country since the early 2000s. It reveals that poverty, which had fallen steadily from 64.3 percent in 2001-02 to 21.9 percent in 2018-19, began rising again after 2020.
According to the WB, a mix of COVID-19, inflation, floods, and economic stress reversed earlier progress. The report adds that Pakistan’s consumption-driven growth model, once effective, has now reached its limit.
The findings draw on 25 years of household surveys, projections, and geospatial analysis. Poverty estimates were based on the Household Integrated Economic Survey (HIES), with new data from HIES 2024-25 expected to give updated figures.
The WB attributed earlier poverty reduction mainly to rising non-agricultural incomes, as many households shifted from farm work to service sector jobs. However, slow structural change, weak job creation, and low productivity have limited further progress. More than 85 percent of jobs remain informal, while women and youth are still largely excluded from the workforce.
The report paints a stark picture of human development challenges: nearly 40 percent of children are stunted, one-fourth of primary-aged children are out of school, and three-quarters of those in school cannot read with comprehension. Access to public services also lags behind, with half of households lacking safe drinking water and nearly one-third without safe sanitation.
Rural poverty remains more than double that of urban areas, with many underdeveloped districts trapped in long-term deprivation. Unplanned urbanisation has also created overcrowded settlements with poor living standards.
Calling for “sustained and people-centred reforms,” the WB outlined four pathways to restoring progress: investing in people and public services, strengthening local governance, expanding responsive safety nets, and adopting progressive fiscal measures. It also stressed the need for stronger municipal finance, targeted investments in poor regions, and better data systems for decision making.
Senior Economist Christina Wieser, one of the report’s authors, said reforms must focus on quality services, job creation, and protecting households from shocks especially for the poorest 40 percent. WB Country Director Bolormaa Amgaabazar added that Pakistan must protect its hard won poverty gains by prioritising women, youth, and resilience building.
In January, the World Bank committed $20 billion under a 10 year partnership framework to support Pakistan’s inclusive and sustainable development.
