The World Bank’s biannual report on Pakistan’s economic outlook paints a bleak picture, indicating that over 10 million individuals in the country are facing the risk of plunging into poverty. This alarming projection is attributed to Pakistan’s sluggish economic growth rate of 1.8% and skyrocketing inflation, which has reached a staggering 26% in the current fiscal year.
Despite efforts to stabilize the economy, the World Bank’s report suggests that Pakistan is likely to miss most of its major macroeconomic targets. The country is expected to fall short of its primary budget target for the third consecutive year, contrary to the International Monetary Fund’s requirements for a surplus.
Lead author of the report, Sayed Murtaza Muzaffari, highlighted that while there are signs of a nascent economic recovery, poverty alleviation measures remain inadequate. Economic growth is projected to stagnate at 1.8%, with the poverty rate hovering around 40%, impacting approximately 98 million Pakistanis who are already grappling with poverty.
The report underscores the vulnerability of those just above the poverty line, with 10 million individuals at risk of slipping into poverty. While some segments, such as agricultural workers, may have benefited from increased output, these gains have been offset by persistent high inflation and limited wage growth in other sectors employing many of the poor.
Moreover, the escalating cost of living and transportation expenses could exacerbate challenges such as increased school dropouts and delayed medical treatments, particularly for disadvantaged families. Food security also remains a concern, especially in regions affected by natural disasters like floods.
The World Bank warns that Pakistan’s economy continues to face significant challenges, including low foreign reserves, high inflation, and policy uncertainties. Growth is projected to remain below potential, with heightened social vulnerability and limited progress in poverty reduction expected in the medium term. Financial sector risks and external headwinds further compound the outlook, underscoring the need for comprehensive policy interventions.
In light of these projections, the World Bank urges concerted efforts to address fiscal deficits, promote economic stability, and implement policies that prioritize poverty reduction and social welfare. Despite these challenges, the World Bank remains committed to supporting Pakistan in its efforts to achieve sustainable economic growth and development.
