ISLAMABAD: Pakistan’s poverty rate is climbing again after nearly two decades of steady decline, the World Bank (WB) warned in a new report on Tuesday, urging urgent people-centred reforms to safeguard vulnerable families and restore inclusive growth.
The study, Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment, is the Bank’s first comprehensive review of poverty and welfare trends in Pakistan since the early 2000s.
It showed that while poverty fell from 64.3 percent in 2001-02 to 21.9 percent in 2018-19, the trajectory reversed after 2020, driven by compounding shocks and a growth model that has “reached its limits.”
According to the WB, the COVID-19 pandemic, record inflation, devastating floods, and prolonged macroeconomic stress have eroded earlier gains. “This is largely owing to compounding shocks … but also because the consumption-driven growth model that delivered early gains has reached its limits,” the report said.
Drawing on 25 years of household surveys, geospatial analysis, and administrative data, the Bank found that poverty reduction was primarily fuelled by shifts from farm labour to non-agricultural jobs. But structural transformation has remained “slow and uneven,” limiting job creation and productivity.
More than 85 percent of jobs remain informal, while women and youth are still largely excluded from the labour market.
The report also highlighted Pakistan’s human development deficits: nearly 40 percent of children are stunted; one in four primary school-aged children is out of school; and three-quarters of those enrolled lack basic reading comprehension. Access to essential services remains poor, with only half of households having safe drinking water and nearly one-third lacking proper sanitation as of 2018.
The World Bank said rural poverty remains more than double the urban rate, with many lagging districts stuck in chronic deprivation. It also warned of “sterile agglomeration” in cities, describing overcrowded urban growth that fails to deliver higher living standards.
Senior Economist Christina Wieser, a lead author, said reforms must expand access to quality services, protect households from shocks, and create better jobs — especially for the bottom 40 percent.
The report argued that investment in people, places and public services, combined with stronger governance and inclusive safety nets, would be vital to restoring progress. It also called for progressive fiscal reforms, including improved municipal finance and targeted investment in the poorest regions, while stressing the need for investment in real-time data systems to support decision-making and track results.
Bolormaa Amgaabazar, World Bank Country Director for Pakistan, warned that Pakistan must protect its “hard-won poverty gains” while accelerating reforms that open opportunities for women and youth. “By focusing on results … Pakistan can put poverty reduction back on track,” she said.
In January, the World Bank committed $20 billion under a 10-year country partnership framework to support inclusive and sustainable development in Pakistan.
