Pakistan faces a deepening poverty crisis as the World Bank’s latest Poverty and Equity Brief (April 2025) paints a grim picture: 42.4% of the country’s population now lives below the poverty line, measured at $3.65/day (2017 PPP). This translates into over 1.9 million new people pushed into poverty just this year, despite inflation showing signs of stabilization.
The sheer scale of economic distress is amplified by stagnant growth. Pakistan’s GDP is projected to grow at only 2.6%, a level too low to create meaningful income-generating opportunities for the poor. Economic growth, in theory, is a pathway out of poverty—but in Pakistan’s case, it’s been uneven, narrow-based, and non-inclusive.
Perhaps even more worrying is the rise in income inequality. The Gini index—a measure of inequality—has climbed by 2 points since FY21, now hovering just under 32. But the real figure might be worse, as surveys often under-represent wealthy households. This growing divide implies that while some segments may benefit marginally, the poor are becoming poorer and more marginalized.
Environmental and agricultural stressors compound this challenge. Rainfall has dropped by 40% in FY25’s first half, crippling crop yields—particularly cotton, which fell by nearly 30%. Rural incomes have been hit hard by a mix of erratic weather, pest attacks, and suboptimal farming strategies. Since agriculture remains a primary livelihood source for millions, this ecological vulnerability directly feeds into the poverty equation.
The World Bank’s findings should act as a wake-up call for policymakers. Cosmetic reforms won’t reverse these trends. What’s needed is a structural, pro-poor growth strategy—centered around social protection, rural development, equitable taxation, and inclusive job creation.
Without targeted interventions, the 42.4% poverty rate may become the “new normal” in Pakistan—a dangerous tipping point for economic and social stability.
Source: World Bank – April 2025 Poverty & Equity Brief
This Article was Published on publicfinance.pk.
