The World Bank has urged Pakistan to adopt bold, sustained, and people-centred reforms to reduce poverty, which has risen to 25.3% in 2024-25, marking a sharp 7% increase over the past three years.
According to the lender’s latest report, “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment,” this is the most comprehensive evaluation of welfare trends in the country since the early 2000s, drawing on 25 years of household surveys and projections.
At a press briefing, World Bank Country Director Bolormaa Amgaabazar highlighted that Pakistan’s poverty reduction, once averaging 3% annually between 2001 and 2015, slowed significantly before reversing after COVID-19.
She noted that non-agricultural income has been more effective in reducing poverty compared to agriculture, while remittances have also played a role. However, with 85% of workers in low-income jobs and 95% in the informal sector, income growth remains weak, averaging just 2–3% between 2011 and 2021.
The report warns that progress in poverty alleviation has been derailed by compounding shocks including the pandemic, inflation, floods, and macroeconomic instability, exposing the limits of a consumption-driven growth model.
It identifies persistent challenges: widespread informal employment, exclusion of women and youth from the labour force, and human capital gaps such as child stunting, poor literacy, and lack of access to safe water and sanitation. Rural poverty remains twice as high as urban, while unplanned urbanisation has deepened inequality.
To restore progress, the World Bank recommends four pathways: investing in people and local governance to address human capital gaps; strengthening safety nets to build resilience; adopting progressive fiscal policies by phasing out wasteful subsidies and boosting municipal finance; and improving data systems for better decision-making.
These steps, the report emphasizes, are essential to protect vulnerable households, create better jobs, and ensure durable, inclusive growth.
