After years of progress, Pakistan’s national poverty rate has increased since 2020, according to a new World Bank study, ‘Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment.’
The report attributes this rise to a combination of crises, including the COVID-19 pandemic, inflation, floods, and macroeconomic instability. The analysis also suggests the nation’s consumption-led growth model has reached its limits.
The assessment, drawing on 25 years of data, reveals that the national poverty rate, having steadily declined from 64.3% in 2001-02 to 21.9% in 2018-19, reversed course in 2020. The document utilizes various data sources, such as household surveys, projections, geospatial analysis, and administrative data, to reach its conclusions. The report emphasizes the necessity of sustained reforms centered around aiding vulnerable families, bolstering livelihood prospects, and expanding access to fundamental services.
World Bank Country Director for Pakistan, Bolormaa Amgaabazar, stressed the importance of safeguarding Pakistan’s poverty reduction achievements while accelerating reforms that broaden employment prospects, especially for women and youth. Focusing on strategic investments in individuals, infrastructure, and accessibility, coupled with enhanced fiscal management and robust data systems, is crucial for putting poverty reduction back on track.
The study indicates that past poverty reduction was largely fueled by increased non-farm income, as more families transitioned from agriculture to service-oriented occupations. However, this shift has been hampered by slow structural change, hindering job creation and broad-based growth. Low productivity across economic sectors has limited income progression, with a significant portion of employment remaining informal and women and youth largely excluded from the workforce.
The report also spotlights significant gaps in human capital, with high rates of childhood stunting, limited access to primary education, and widespread learning deficits among primary school attendees. Public services also face challenges, with limited access to safe drinking water and sanitation for many households.
Senior Economist Christina Wieser, a lead author of the report, emphasized the precarious nature of poverty reduction progress due to structural vulnerabilities. Reforms aimed at improving service access, protecting households from economic shocks, and generating better employment opportunities, particularly for the most disadvantaged, are vital for lasting, inclusive growth.
The World Bank report proposes four key pathways to revitalize progress: investing in human capital and local governance; strengthening household resilience to shocks; implementing progressive fiscal policies; and improving data systems for informed decision-making. The World Bank Group has a long-standing partnership with Pakistan, having provided over $48.3 billion in assistance since 1950.