On September 23, the World Bank highlighted that Pakistan’s earlier success in lowering poverty has plateaued due to recurring economic disruptions and insufficient structural changes. Between 2001 and 2015, urban expansion contributed to a significant drop in the national poverty rate, which fell from 64% to 22% by 2019. This shift was driven by rural populations transitioning into informal city-based employment in areas such as transportation, construction, and commerce.
However, recent developments have undermined this momentum. By 2024, the proportion of people living in poverty climbed to 25%, reversing prior gains. According to the institution, the economic framework that initially supported poverty alleviation lacks the resilience needed for long-term advancement. The report described the situation as a halt in what had once been a promising trend.
Multiple external and internal challenges have played a role. These include the global health crisis triggered by the pandemic, inflationary pressures linked to the conflict in Ukraine, and catastrophic flooding in 2022. A subsequent flood event in 2025 also affected economic output, though its impact was less severe.
Underlying weaknesses in key sectors have further hindered progress. The study identified low labor productivity, inadequate public infrastructure, and limited educational access as persistent issues. Many individuals who had previously moved out of poverty remained economically fragile, making them susceptible to downturns. The analysis relied on Pakistan’s domestic poverty benchmark; international standards indicate even higher levels of deprivation.
Khurram Schehzad, an economic adviser to the finance minister, recognized the setbacks but emphasized ongoing efforts to strengthen social safety nets, stimulate employment, and refine subsidy distribution. He stated that these measures are part of a broader reform strategy aimed at protecting at-risk populations while fostering inclusive and durable economic improvement.
— news from Reuters
— News Original —
Pakistan’s poverty reduction reversed by economic shocks, weak reforms, World Bank says
Sept 23 (Reuters) – Pakistan’s sharp decline in poverty has stalled in recent years due to economic shocks and a lack of structural reforms, the World Bank said on Tuesday. n nThe international lender said that between 2001 and 2015, a wave of urbanization helped reduce the national poverty rate from 64% to 22% by 2019, as rural workers moved into informal urban jobs in sectors like transport, construction, and trade. n nSign up here. n nHowever, that progress has since slowed, with poverty rising to 25% by 2024. n n”The growth model that supported initial poverty reduction has proven insufficient to sustain progress,” said a World Bank study. “Pakistan ‘s once-promising poverty reduction trajectory has come to a troubling halt, reversing years of progress.” n nFRAGILE GROWTH MODEL n nThe report cited numerous shocks — including the COVID-19 pandemic, global inflation following the Ukraine war, and devastating floods in 2022 — as key setbacks. n nIt also pointed to weak fundamentals: low productivity in labor-absorbing sectors, poor public services, and limited access to education and training. n nMany who escaped poverty remained just above the threshold, leaving them vulnerable to economic disruptions. The study used Pakistan’s national poverty line; international measures suggest even higher rates. n nFurther flooding in 2025 again hit growth, though less severely than in 2022. n nKhurram Schehzad, adviser to the finance minister, acknowledged recent setbacks but said the government had expanded welfare programs, invested in job creation, and was working to better target subsidies. n n”These priorities are aligned with the broader reform agenda, ensuring that Pakistan not only cushions vulnerable households against shocks but also creates the conditions for inclusive and sustained poverty reduction,” Schehzad said. n nReporting by Saeed Shah and Ariba Shahid; writing by Saeed Shah, Editing by William Maclean