The World Bank has issued a stark warning over Pakistan’s economic and social trajectory, cautioning that years of progress in reducing poverty are at risk of unraveling. In its latest Poverty, Equity, and Resilience Assessment, the Bank highlights how compounding crises have pushed millions back into hardship, threatening to deepen inequality and stall development.
The report traces Pakistan’s poverty journey, noting that the country achieved a significant reduction in poverty from 64.3 percent in 2001 to 21.9 percent by 2018. This decline was largely supported by off-farm informal employment, increasing non-farm labor incomes, and the steady flow of remittances. However, momentum slowed after 2015, and multiple shocks—including the COVID-19 pandemic, historic floods, soaring inflation, and persistent economic instability—have reversed much of the earlier progress. As of now, the World Bank estimates that 25.3 percent of Pakistan’s population lives below the poverty line.
The study underscores that Pakistan’s current economic framework is no longer delivering inclusive growth. Real wage growth for low-income groups has stagnated, leaving millions without the ability to translate overall economic growth into tangible improvements in household income. Vulnerability is widespread, with nearly 14 percent of the population at risk of sliding back into poverty when faced with even modest shocks.
The report also points to systemic weaknesses in human development. Access to essential services such as healthcare, education, safe drinking water, and sanitation remains limited. Nearly 40 percent of children in Pakistan experience stunting due to malnutrition, while one in four school-aged children is out of school. Even among enrolled children, learning outcomes remain critically weak, with many unable to read a simple story by the end of primary education.
Geographic disparities add another layer of complexity. Rural households are more than twice as poor as their urban counterparts, with provinces like Balochistan reporting poverty rates above 40 percent. Meanwhile, rapid urbanization has not generated expected productivity gains due to weak infrastructure, inadequate planning, and poor service delivery in growing cities.
To address these challenges, the World Bank outlines four reform pathways: investing in human capital, enhancing resilience through stronger social protection systems, introducing progressive fiscal policies, and strengthening data collection to inform evidence-based policymaking. While initiatives such as the Benazir Income Support Programme (BISP) and the National Poverty Graduation Programme have provided crucial relief, the Bank stresses that these programs cannot replace broader structural reforms.
The report emphasizes that rebuilding trust between citizens and the state is central to overcoming inequality. Improving governance, expanding access to quality public services, and digitizing delivery systems to ensure transparency are all critical steps. In addition, the Bank highlights that addressing climate risks and strengthening preparedness for future disasters is vital to preventing millions more from falling into poverty.
Ultimately, the World Bank warns that without urgent, comprehensive reforms, Pakistan risks entrenching a cycle of vulnerability, inequality, and missed opportunities. However, with decisive action and long-term planning, the country can still shift course toward resilience, equity, and sustainable prosperity.
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