Pakistan has seen a significant increase in its poverty rate over the last six years, with almost 29% of the population now living below the poverty line. This rise is attributed to economic shocks, high inflation, and weak growth that have led to a decline in household incomes and consumption. Rural areas have been more severely impacted, experiencing an eight-percentage-point increase in poverty compared to six percentage points in urban areas.
The data, based on the Household Integrated Economic Survey and the Pakistan Social and Living Standards Measurement, reveals a rise in the poverty rate from 21.8% in 2018-19 to 28.9% in 2024-25, marking a seven-percentage-point increase. The report highlights the challenges faced by Pakistan due to various crises, including balance-of-payments pressures, the Covid-19 pandemic, inflation, and macroeconomic adjustments.
Household incomes and consumption in Pakistan have declined over two survey cycles, indicating a stagnation in living standards. The analysis suggests that economic growth has disproportionately benefited higher-income groups, while lower-income households have experienced a decline in real incomes and purchasing power. This disparity has been particularly harsh on poorer households reliant on wages rather than asset-based income.
Wealthier households, on the other hand, have been able to mitigate the impact of rising prices through ownership of assets like real estate and financial investments. The report emphasizes the need for Pakistan to address the dual challenge of sustaining economic growth while tackling increasing poverty and inequality. This comes amidst ongoing geopolitical uncertainties and external economic risks.
