Pakistan poverty rate rises to 28.9% despite macroeconomic stabilisation

Pakistan’s poverty rate increased to 28.9% in 2024–25, despite signs of macroeconomic stabilisation, underscoring a persistent gap between aggregate economic indicators and household-level welfare, according to the Pakistan Economic Survey 2025–26.

The report showed that poverty, which had declined over the long term from 50.4% in 2005–06 to 21.9% in 2018–19, has since reversed, rising again to 28.9% in 2024–25.

Income inequality also widened during the same period, with the national Gini coefficient increasing from 28.4 to 32.7, reflecting a less equitable distribution of income across households.

Rural poverty remained significantly higher at 36.2%, compared with 17.4% in urban areas, highlighting deep structural disparities between the countryside and cities.

The survey linked the rise in poverty to multiple economic shocks in recent years, including inflationary pressures, currency depreciation, floods and subdued real income growth. While inflation has eased from earlier peaks, households continue to face sustained pressure from accumulated increases in food, energy and transport costs.

These trends come alongside macroeconomic stabilisation indicators cited by the government, including 3.7% GDP growth, narrowing fiscal deficits, stronger foreign exchange reserves and improved investor confidence.

Social protection spending increased during the period under review, with pro-poor expenditures rising to Rs4.66 trillion in July–March FY26 from Rs4.25 trillion a year earlier.

The Benazir Income Support Programme (BISP) remained the largest cash transfer initiative, with Rs722.49 billion allocated in FY26 and Rs540.27 billion disbursed during the first nine months of the fiscal year.

Overall social security and welfare spending increased to Rs822.21 billion, while disaster-related spending rose to Rs224.92 billion amid climate-related impacts and recovery efforts.

Despite the deterioration in poverty indicators, the survey reported improvements in several social metrics, including school attendance, literacy, internet access, immunisation coverage, sanitation, and access to cleaner fuels.

Economists noted that while stabilisation has helped restore macroeconomic balance, stronger job creation and productivity growth are required for poverty reduction to become broad-based.

Finance Minister Muhammad Aurangzeb acknowledged the structural challenge, stating that traditional economic indicators alone were insufficient to ensure employment generation and calling for a “paradigm shift in the age of AI.”