ISLAMABAD: Pakistan’s economic model has run out of steam, reversing two decades of poverty reduction and pushing millions back into hardship, the World Bank warned in its latest report, Reclaiming Momentum Towards Prosperity.
The report said that poverty, which had fallen sharply from 64.3% in 2001-02 to 21.9% in 2018-19, is once again climbing. It rose to 24.7% in 2019-20, briefly dipped to 18.3% in 2021-22, and then surged to 25.3% in 2023-24—a seven percentage point increase in just two years.
Citing Covid-19, inflation, political turmoil, floods, and economic instability as triggers, the World Bank stressed that Pakistan’s consumption-driven growth model is broken. “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,” the report said.
The Bank also noted that while social protection schemes have prevented destitution for some, they cannot replace the need for transformative reforms. Weak health and education systems, regressive taxation, elite capture, and poor job creation remain major obstacles to inclusive growth.
Human development indicators remain alarming: nearly 40% of children are stunted, one in four school-age children is out of school, and most jobs are informal with little security. Women and youth remain excluded from the workforce.
“The gains of the past two decades are at risk,” the report warned, urging urgent reforms to restore momentum towards prosperity.