Pakistan accounts for about 48% of the people living below the $3-per-day poverty line across the Middle East, North Africa and Afghanistan-Pakistan (Menaap) region, according to a new World Bank economic outlook. The assessment said poverty in the region remains above pre-pandemic levels and continues to increase, with Pakistan accounting for nearly half of the region’s extremely poor population. The World Bank also projected that Pakistan’s economic growth would strengthen to 3.8% in the current fiscal year, while the fiscal deficit is expected to reach 3.5% of gross domestic product.
The World Bank said the Menaap region is currently the only region globally where poverty remains above its pre-pandemic level and continues to rise. Pakistan has become a major contributor to that increase, with the country’s poverty rate affected by a series of economic and climate-related shocks over recent years. The bank said a prolonged slowdown in tourism, construction and related services could further reduce labour demand and weaken income flows for economies that depend heavily on workers sending earnings home, with Pakistan and parts of the Levant particularly exposed to these conditions.
Pakistan’s economic growth is nevertheless expected to improve gradually, with the World Bank estimating gross domestic product growth at 3.2% in fiscal year 2025, 3.7% in fiscal year 2026 and 3.8% in fiscal year 2027. The bank said services, manufacturing and livestock production have remained relatively resilient despite higher import costs. Rising commodity and transportation expenses are expected to put additional pressure on inflation and external balances, but continued domestic economic activity is projected to offset some of those pressures.
The World Bank estimated Pakistan’s current account deficit at 0.1% of gross domestic product in fiscal year 2026, with the deficit expected to widen to 0.8% in fiscal year 2027. The fiscal deficit is projected to rise from 2.6% in fiscal year 2026 to 3.5% in fiscal year 2027. These projections come as higher commodity prices, transportation costs and other external pressures continue to affect countries across the region, while governments also face constraints on their ability to provide additional fiscal support.
The concentration of poverty in Pakistan is particularly significant when measured against the World Bank’s $3-per-day threshold. The bank said Pakistan represents approximately 48% of the Menaap population living below that line, while Afghanistan, the Syrian Arab Republic and the Republic of Yemen together account for another 47%. The latest estimates show that poverty at the $3-per-day threshold approached or exceeded 20% in Djibouti, Pakistan, Syria and the Republic of Yemen.
Across the wider Menaap region, 14.3% of the population was estimated to be living on less than $3 per day in 2024, compared with 10.4% globally. At the higher $4.20-per-day poverty line, 26.9% of the region’s population was living below the threshold, compared with 18.9% worldwide. The World Bank said the increase in poverty was primarily driven by Pakistan, where the poverty rate increased by 6.4 percentage points at the $3-per-day threshold and by 3.2 percentage points at the $4.20 threshold between 2018-19 and 2024-25.
The increase in poverty in Pakistan followed a succession of economic and environmental shocks. These included the COVID-19 pandemic, the devastating floods of 2022, a macroeconomic crisis involving high inflation and currency depreciation, and an extended period of economic adjustment. According to the World Bank, these pressures weakened real household incomes and reduced employment opportunities, contributing to the increase in poverty recorded over the period.
Food security is another major concern for Pakistan and other vulnerable economies in the region. The World Bank warned that a stronger-than-usual El Niño weather pattern expected later in 2026 could intensify food-price pressures and affect poorer households. Pakistan is particularly exposed because changes in monsoon conditions can have a direct impact on agricultural production, food availability and household incomes.
The World Bank also assessed the broader economic impact of the ongoing US-Iran conflict, noting that losses are concentrated in the region but that the eventual scale remains uncertain. Under its baseline assumption that disruptions continue through the end of 2026 without sustained further escalation, the regional economy is projected to contract by 2.1% in 2026 after expanding by 3.3% in 2025.
Oil-importing economies including Pakistan, Djibouti, Egypt, Jordan, Morocco and Tunisia face additional exposure through higher inflation, reduced fiscal space, weaker remittance flows from Gulf economies and increased borrowing costs. The World Bank said higher insurance risk premiums could further increase financing costs while elevated energy and commodity prices place pressure on domestic economies.
For Pakistan, the outlook therefore combines a projected gradual recovery in economic growth with persistent poverty and vulnerability to external shocks. While stronger activity in services, manufacturing and livestock production could support the broader economy, the World Bank’s assessment indicates that improvements in headline economic growth may not immediately translate into stronger household incomes. Food prices, employment opportunities, climate conditions, inflation and external financing pressures will remain important factors in determining whether the country can reverse the recent increase in poverty.
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