ISLAMABAD: The World Bank (WB) has called for bold, sustained, and people-centred reforms to reduce poverty, strengthen resilience, and protect vulnerable populations amid an existing poverty rate of 25.3% in Pakistan.
The lender's report "Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment", issued on Tuesday, is based on 25 years of official household surveys in the country and marks the first comprehensive evaluation of poverty and welfare trends in the country since the early 2000s.
Speaking at a press briefing in this regard, WB Country Director Bolormaa Amgaabazar said that the poverty level in Pakistan has increased by 7% in the past three years.
"Poverty rate in 2022 was 18.3% and increased to 25.3% in 2024-25," the official noted, recalling that the poverty rate witnessed an annual decrease of 3% between 2001 and 2015 which reduced to 1% between 2015 and 2018.
However, Amgaabazar pointed out that the poverty rate increased after the COVID-19 pandemic in 2020.
Highlighting that no household survey was carried out after 2018-19, the WB country director said that income sources other than those from the agriculture sector are contributing to the declining poverty rate.
Also, she accentuated that the non-agri income sector witnessed a 57% reduction in poverty rate, whereas the number stood at 18% in the agriculture income domain.
With remittances also contributing to the reduction in poverty rate, the lender's official also highlighted that the Pakistanis' income only increased by 2-3% between 2011 and 2021.
"85% of people work in low-income sectors and 95% work in informal ones," she remarked.
Meanwhile, the WB report also highlights asteady decline from 64.3% in 2001-02 to 21.9% in 2018-19. The national poverty rate began to increase in 2020, mainly due to compounding shocks including COVID-19, inflation, floods and macroeconomic stress, but also because the consumption-driven growth model that delivered early gains reached its limit.
To address this, the report called for sustained and people-centred reforms to protect poor and vulnerable families, improve livelihood opportunities, and expand access to basic services for all.
The report tapped into 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 remained the most relevant tool for policy-making.
For international comparisons, the report applied global poverty thresholds updated in June 2025.
Beyond 2018-19, which is the latest available survey round, it used micro-simulation models to project poverty estimates.
New poverty estimates and trends based on survey data would 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,"WB's Country Director Amgaabazar said.
"By focusing on results — investing in people, places, and access to opportunities; building resilience against shocks; prioritising fiscal management; and developing better data systems for decision-making — Pakistan can put poverty reduction back on track," she added.
The assessment found that over the past two decades, poverty reduction in Pakistan was primarily driven by rising non-agricultural labour income, as more households shifted away from farm work to low-quality service jobs.
However, it said, slow and uneven structural transformation has hindered diversification, job creation, and inclusive growth.
"As a result, low productivity across sectors has constrained income growth. Over 85% of jobs remain informal and women and youth remain largely excluded from the labour force," the report said.
The report also highlighted 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 do 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 all households having safely managed access to drinking water in 2018, and 31% lacking safe sanitation," it added.
The report underscored 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.
Furthermore, unplanned urbanisation has led to 'sterile agglomeration' — 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," she added.
The report outlined four pathways to restore progress. First, invest in people, places, and opportunities to tackle human capital gaps, particularly for the most disadvantaged.
Investments in public services such as health, education, housing, water, and sanitation, need to be accompanied by strengthening 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 and wasteful subsidies, and prioritising targeted investments for the poorest.
Finally, invest in timely data systems to guide decisions, target resources, and track results.