Alarming poverty level

A new World Bank report on poverty, equity and resilience in Pakistan delivers a sobering verdict — Pakistan's hard-won gains in reducing poverty are rapidly unraveling. The alarming reversal demands immediate and decisive action. Unfortunately, the government appears to lack the funding or foresight to implement a suitable plan of action.

After two decades of significant progress that saw the national poverty rate fall dramatically, the trend has sharply reversed since 2020, when the Covid-19 pandemic upended the global economy. Though Pakistan's economy famously appeared to have done relatively well during the pandemic, underlying issues actually became more pronounced, especially for millions of people who were unable to find regular work and earn money.

The rate is now projected to cross 25% this year, while calculations using constant values and more countries put it at almost 45%. While Covid played a big role, the setback was also driven by economic shocks, including high inflation and the 2022 floods, but the root cause is a deeper structural flaw. The consumption-driven growth model that powered earlier gains has reached its limits.

The report highlights that over 85% of jobs are in informal sectors, where employees lack job security or the prospects of a raise or other improvement in income. It is also worth noting that rural poverty is more than double the urban rate, and geographic disparities are severe, with poverty in some districts exceeding 70%. Crippling human capital deficits, such as widespread child stunting and a learning crisis where 75% of children cannot read a simple story, lock families into poverty.

The World Bank has outlined a critical pathway for recovery, but it would require investing in people — improving health, education and basic services — while building household resilience through stronger social safety nets and adopting progressive fiscal measures to target support towards the most vulnerable.