ISLAMABAD, September 23, 2025-The World Bank today released "Reclaiming Momentum Towards Prosperity: Pakistan's Poverty, Equity and Resilience Assessment", that marks the first comprehensive evaluation of poverty and welfare trends in the country since the early 2000s.
After a steady decline from 64.3% in 2001-02 to 21.9% in 2018-19, the national poverty rate began to increase in 2020. This is largely owing 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 taps 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 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 poverty estimates and trends 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. Over 85% of jobs remain informal and women and youth remain largely excluded from the labor force.
The report also highlights human capital gaps: nearly 40 percent of children are stunted; one-quarter of primary-school-aged children are out of school; and 75 percent 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 percent 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. Furthermore, unplanned urbanization 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 percent-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 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 prioritizing targeted investments for the poorest. Finally, invest in timely data systems to guide decisions, target resources, and track results.
The World Bank Group in Pakistan
Pakistan has been a member of the World Bank since 1950. Since then, the World Bank has provided over $48.3 billion in assistance. The current portfolio has 54 projects and a total commitment of $15.7 billion.
IFC has invested approximately $13 billion in Pakistan since 1956, with a diverse range of projects supporting renewable energy, financial inclusion, infrastructure development, agribusiness, manufacturing, housing, healthcare, and trade, among others.
