World Bank Warns of Rising Poverty in Pakistan, Calls for Bold People-Centred Reforms

Pakistan’s poverty rate is once again on the rise, according to a new World Bank (WB) report, which has urged the government to adopt bold and people-focused reforms to protect vulnerable families and secure long-term stability.

The report, titled “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment”, is the first in-depth evaluation of poverty and welfare trends in the country since the early 2000s. Drawing on 25 years of household surveys, spatial analysis, and administrative data, the findings paint a worrying picture for millions of Pakistanis.

Between 2001 and 2019, Pakistan witnessed a remarkable decline in poverty, falling from 64.3% in 2001-02 to just 21.9% in 2018-19. But since 2020, the trend has reversed.

The World Bank estimates the national poverty rate has now risen to 25.3% in 2024-25, an increase of about 7% in just three years.

The reversal, the report explains, is due to compounding shocks:

• The COVID-19 pandemic that disrupted livelihoods
• Persistent inflationary pressures
• Severe floods that devastated communities
• Ongoing macroeconomic instability

The Bank noted that Pakistan’s consumption-driven growth model, which initially helped reduce poverty, has now reached its limits.

The report highlights several structural issues holding back progress:

• Jobs & Informality: Over 85% of jobs remain informal, leaving workers without stability or benefits. Most households have shifted from agriculture to low-paying service jobs, but women and youth remain largely excluded from the workforce.
• Low Income Growth: Pakistani incomes grew by only 2–3% between 2011 and 2021, far below what’s needed to improve living standards.
• Human Capital Gaps: Nearly 40% of children are stunted, while one-quarter of primary-school-aged children remain out of school. Among those attending, 75% struggle with basic reading comprehension.
• Public Services: Only half of households had safe drinking water access in 2018, and 31% lacked proper sanitation.
• Rural vs Urban Divide: Poverty in rural areas is twice as high as in urban centres, with many districts stuck in cycles of deprivation for decades. Unplanned urbanisation has also created overcrowded, low-standard settlements known as “sterile agglomerations.”

World Bank Country Director for Pakistan, Bolormaa Amgaabazar, said protecting Pakistan’s hard-won gains is critical:

“It will be essential to expand jobs and opportunities, especially for women and young people, while strengthening resilience against shocks. Pakistan must focus on results investing in people, places, and opportunities.”

Senior Economist Christina Wieser, one of the report’s lead authors, stressed:

“Reforms that expand access to quality services, protect households from shocks, and create better jobs especially for the bottom 40% are essential to break cycles of poverty.”

The report lays out four major pathways to restore progress:

1. Invest in People & Services: Improve education, healthcare, water, sanitation, and housing while strengthening local governance.
2. Build Resilience: Create inclusive, responsive safety nets to protect families from economic shocks.
3. Progressive Fiscal Reforms: Improve municipal finance, cut wasteful subsidies, and redirect funds towards the poorest households.
4. Invest in Data Systems: Timely, accurate data is essential for policymaking and targeting resources effectively.

The findings serve as a wake-up call for policymakers. With one in four Pakistanis now living below the poverty line, the country risks undoing two decades of progress if structural reforms are delayed.

The World Bank has already pledged $20 billion under a 10-year Country Partnership Framework (CPF) to support inclusive and sustainable development in Pakistan. However, experts stress that domestic reforms — not just international aid — will determine whether poverty reduction efforts succeed.

For ordinary Pakistanis, the report reflects what many already feel: rising prices, fewer job opportunities, and limited access to quality services. Unless reforms focus on people-first development, the poverty crisis could deepen further.