Pakistan’s Poverty Rate to Remain High at 42.4%: World Bank

Pakistan’s poverty rate is expected to remain unchanged at 42.4 percent in fiscal year 2025, meaning that 1.9 million more people are projected to fall into poverty this year alone. According to the World Bank’s latest Poverty & Equity Brief, the country’s current economic growth rate of 2.6 percent is insufficient to bring down poverty levels. External risks are likely to further affect economic recovery and poverty reduction efforts. The agriculture sector, which showed growth in FY2024, is now under pressure. In the first half of FY2025, rainfall dropped by 40 percent. Crop yields are expected to decline sharply and keep agricultural growth below 2 percent. Given that agriculture employs about half of Pakistan’s working poor, rural poverty is projected to rise slightly by 0.2 percentage points. Food insecurity is also intensifying, with around 10 million rural residents at risk of acute hunger. Fiscal tightening has curtailed development spending, directly affecting the construction industry. Industrial and service sector performance remained weak in H1 FY2025, yielding negligible income gains for low-income workers: construction incomes dropped by 1.4 percent and low-productivity service jobs increased by just 0.7 percent. Though nominal daily wages for low-skilled workers have nearly doubled since FY2019, real wages have stagnated or declined slightly, pointing to a loss of purchasing power. Remittances rose sharply—by 33 percent—in the same period, but their benefits are unevenly distributed. Only 3.2 percent of the lowest-income households receive remittances. An uptick in low-skilled emigration since 2020 may gradually extend the benefits of remittances to poorer families. Meanwhile, the government’s social protection efforts are expected to support consumption and provide a buffer against market shocks.