Poverty in pakistan hits 42.4%

Pakistan’s poverty rate is expected to remain high at 42.4% in fiscal year 2025, with 1.9 million more people falling into poverty as the population grows at nearly 2% annually.

Pakistan’s economic growth rate of 2.6 percent is currently too low to significantly reduce poverty levels, according to the latest Poverty & Equity Brief from the World Bank. The report highlights that external risks are likely to continue impacting the country’s recovery and efforts to alleviate poverty.

The agriculture sector, which saw growth in FY2024, is now facing challenges. A 40 percent drop in rainfall during the first half of FY2025 is expected to cause a sharp decline in crop yields, keeping agricultural growth below 2 percent. Since agriculture employs a large portion of the working poor in rural areas, rural poverty is projected to increase slightly by 0.2 percentage points.

Food insecurity is becoming a major concern, with around 10 million rural residents at risk of acute hunger. Fiscal tightening has reduced development spending, which has negatively impacted the construction industry. Industrial and service sectors also showed weak performance in the first half of FY2025, offering limited income gains for low-income workers. For example, construction incomes fell by 1.4 percent, and low-productivity service jobs grew by just 0.7 percent.

Although nominal daily wages for low-skilled workers have nearly doubled since FY2019, real wages have stagnated, which indicates a loss of purchasing power. While remittances have risen by 33 percent, they remain unevenly distributed, with only 3.2 percent of the lowest-income households receiving any benefits.

The government’s social protection programs are expected to provide some relief, helping to support consumption and act as a buffer against economic shocks. However, the broader economic recovery remains fragile.