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Poverty headcount in Pakistan reached 39.4% in FY23, projects World Bank

  • Expects poverty reduction to be gradual in the medium term, owing to weak growth and lower labor income, persistent inflation (especially for food and energy), and lower remittances
Published October 3, 2023
Photo: AFP
Photo: AFP

In a distressing development, the poverty headcount in Pakistan is estimated to have reached 39.4% in FY23—more than 5 percentage points higher than in FY22, amid slowing growth and high inflation, revealed World Bank in its report titled ‘Pakistan Development Update: Restoring Fiscal Sustainability’ released on Tuesday.

The significant increase in poverty is due to reduced economic activity and incomes, record-high food and energy prices, disruption to services and loss of crops and livestock during the catastrophic 2022 floods, the World Bank said in the section labelled ‘Poverty’.

The World Bank, in its disclaimer, also mentioned that the last Household Integrated Economic Survey (HIES) that allowed accurate measurement of poverty took place in 2018.

“A new survey is needed to update the poverty headcount,” it said.

The development comes at a time when Pakistan is facing a massive economic crisis with a Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) only giving a few months of breathing space to policymakers. However, while the economy teeters, high inflation has led to a severe rollback of demand and economic activity, leading to frequent shutdowns of industrial units and scaling back of operations.

At the same time, a fast-depreciating rupee – it only gained in value during September – has caused real incomes to fall, with last-year’s floods adding to economic distress. Similarly, higher power tariffs and fuel prices have only aggravated the situation in households.

Meanwhile, the report highlighted that over 80% of poor workers in the country rely on agriculture, manufacturing, construction, and trade sectors for employment. “Muted economic activity in these sectors has had negative impacts on job quality and labour incomes for poor households and for those at risk of falling into poverty,” it said.

Moreover, the real value of remittances from abroad has also declined, noted the report.

“At the same time, food inflation nearly tripled, reaching an average of 38.7% in FY23.

Higher energy prices will maintain domestic price pressures and may contribute to growing social and economic insecurity: World Bank

“As a result, households’ real incomes and purchasing power declined. This is particularly true for poor and vulnerable households, which spend roughly half their budgets on food, with households in the poorest decile experiencing a 7-percentage point higher inflation rate than the richest decile,” noted the report.

The report projected poverty reduction to be gradual in the medium term, owing to weak growth and lower labor income, persistent inflation (especially for food and energy), and lower remittances.

“The poverty headcount rate, measured at the lower-middle-income country poverty line of US$3.65/day 2017 PPP, is expected to decline to 37.2% in FY24 and further to 35% in FY25 on resumption of growth and economic activity.

“However, the higher energy prices will maintain domestic price pressures and may contribute to growing social and economic insecurity,” the report added.

World Bank warned that protracted and elevated food and energy price inflation, in the absence of substantial growth, could cause social dislocation and have negative welfare impacts, especially on the worse-off households with already depleted savings and reduced incomes.

“Increased targeted transfers will play a vital role to protect the poorest from these risks,” it noted.


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Shahid Khan Oct 03, 2023 04:55pm
What a fall for our country. The world is going up and we going down the drain. All political gimmicks destroyed this country beyond repair
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Tulukan Mairandi Oct 03, 2023 05:28pm
And most of those that are in the 60% window are funded by overseas Pakistanis that are escaping taxes and sending money home via hundi hawala business. These charlatans, who our president considers heros, must be smashed and whacked with non compromising 40% tax or risk severe consequences.
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KU Oct 03, 2023 05:37pm
Guess this ''reduced economic activity, incomes, record-high food and energy prices'' is due to planned designs of our enemies. Shameless leading the country down the drain.
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TidBit Oct 03, 2023 06:29pm
Do you why we are like this. We have no one to blame but ourselves. The attitude and mind set of the people Right in these very columns, several idiots from my country, want to tax people more even at this juncture. And these additional taxes are not to help the poor, but to start a war with India and get back Kashmir. At this point of our economy, if my fellow Pakistanis are thinking about this misadventure, Kargil not withstanding, we have no hope for progress. As long as our priorities are messed up, we will never develop as a nation.
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AmirSh. Oct 03, 2023 07:46pm
Nation, politician, Establishment simply unable to understand dire state of the economy. Probably, they don't want to face the world of reality. it is undoubtedly a high time for them to wake up from deep slumber and do something to fix economic and political affairs.
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Arbab Oct 03, 2023 08:30pm
Overseas Pakistanis are tired of wasting their clean hard earned money in black hole of dictators controlled state of Pakistan.
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Arbab Oct 03, 2023 08:34pm
Thank you neutrals, the self centered animal with so much of power & muscles but with a tiny brain.
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TheActualTruth Oct 03, 2023 09:04pm
@AmirSh., I think nation understands it very well, its only the Establishment who is not waking up from the dream of its superiority and hell bent of continuing its thuggish behaviour. County and Nation be damned they just need to show who is the boss. And they don't even reaize that in the end there would be nothing left to be the boss off.
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AmirSh. Oct 03, 2023 09:45pm
@TheActualTruth, Right on.
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