World Bank Reports Rise in Poverty Rate in Pakistan Over 3 Years

Pakistan’s poverty rate has risen by seven percentage points in the past three years, according to a new World Bank assessment.

The World Bank today released Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment, the first comprehensive evaluation of poverty and welfare trends in the country since the early 2000s.

World Bank Country Director for Pakistan Bolormaa Amgaabazar, speaking at a press briefing, said the current poverty rate stands at 25.3%, compared with 18.3% in 2022. The rate climbed to 24.8% in 2023-24 before reaching 25.3% in 2024-25.

She noted that between 2001 and 2015, Pakistan recorded a steady decline in poverty, with the rate falling by about 3% annually. From 2015 to 2018, the pace of reduction slowed to around 1% per year. However, since 2020, poverty levels have begun to rise again, with COVID-19 accelerating the increase.

After a steady decline from 64.3% in 2001-02 to 21.9% in 2018-19, the national poverty rate began to rise in 2020. This increase is largely due to compounding shocks, including COVID-19, inflation, floods, and macroeconomic stress, but also because the consumption-driven growth model that delivered early gains has reached its limits.

To address this, the report calls for sustained and people-centered reforms to protect poor and vulnerable families, improve livelihood opportunities, and expand access to basic services for all.

The report draws on 25 years of official household surveys, nowcasted projections, geospatial analysis, and unique administrative data sources. Official poverty estimates are based on multiple rounds of the Household Integrated Economic Survey (HIES), using Pakistan’s national poverty line and methodology, which remains the most relevant tool for policymaking.

For international comparisons, the report applies global poverty thresholds updated in June 2025. Beyond 2018-19, which is the latest available survey round, it uses microsimulation models to project poverty estimates. New estimates based on survey data will be produced once the recently collected HIES 2024-25 data is released.

“It will be critical to protect Pakistan’s hard-won poverty gains while accelerating reforms that expand jobs and opportunities, especially for women and young people,” said Bolormaa Amgaabazar, World Bank Country Director for Pakistan. “By focusing on results, investing in people, places, and access to opportunities, building resilience against shocks, prioritizing fiscal management, and developing better data systems for decision-making, Pakistan can put poverty reduction back on track.”

The assessment finds that over the past two decades, poverty reduction in Pakistan was primarily driven by rising non-agricultural labor income, as more households shifted away from farm work to low-quality service jobs. However, slow and uneven structural transformation has hindered diversification, job creation, and inclusive growth. As a result, low productivity across sectors has constrained income growth. More than 85% of jobs remain informal, while women and youth remain largely excluded from the labor force.

The report also highlights human capital gaps. Nearly 40% of children are stunted, one-quarter of primary-school-aged children are out of school, and 75% of children who attend primary school cannot read and understand a simple story by the end of the primary cycle. Public service deficits are widespread, with only half of households having safely managed access to drinking water in 2018, and 31% lacking safe sanitation.

The report underscores systematic, complex, and persistent spatial disparities in welfare across Pakistan. Rural poverty remains more than twice as high as urban poverty, and many districts that lagged behind decades ago continue to do so today. In addition, unplanned urbanization has led to crowded settlements with low living standards.

“Progress in poverty reduction is threatened by structural vulnerabilities,” said Christina Wieser, Senior Economist and one of the lead authors of the report. “Reforms that expand access to quality services, protect households from shocks, and create better jobs, especially for the bottom 40%, are essential to break cycles of poverty and deliver durable, inclusive growth.”

The report outlines four pathways to restore progress. First, invest in people, places, and opportunities to tackle human capital gaps, particularly for the most disadvantaged. Investments in health, education, housing, water, and sanitation need to be accompanied by stronger local governance. Second, build household shock-resilience by making safety nets responsive and inclusive.

Third, adopt progressive fiscal measures by improving municipal finance, phasing out inefficient subsidies, and prioritizing targeted investments for the poorest. Finally, invest in timely data systems to guide decisions, allocate resources, and track results.