High incidence of poverty

The World Bank has recently released an estimate that Pakistan accounts for nearly half of the poverty in the MENAAP region.

There is need first to identify what the MENAAP region is and the methodology that has been used to quantify the incidence of poverty in the region.

MENAAP stands for the Middle East, North Africa, Afghanistan and Pakistan. The World Bank has recently included Pakistan in this region and excluded it from South Asia.

There are 23 countries in the MENAAP region. Three countries have population above 50 million. These are Pakistan, Egypt and Iran with populations of 255, 118 and 88 million, respectively. There are seven countries with population between 25 and 50 million. These are Algeria, Iraq, Afghanistan, Morocco, Saudi Arabia, Syria and Yemen. The remaining 13 countries have small populations. The overall estimated population in the MENAAP region is 828 million. Pakistan has the highest share of over 30 percent of the regional population.

The regional GDP in USD is USD 5,026 million. This implies a per capita income of USD 6070. Pakistan has a much lower per capita income at close to USD 1600. This is only 26 percent of the regional average. Therefore, it is not surprising that Pakistan has a significantly higher incidence of poverty.

The incidence of poverty has been estimated with the poverty line at USD 4.20 (2021 PPP). The overall incidence is 26.9 percent in the MENAAP region, implying that the number of poor is 223 million. The estimated incidence of poverty in Pakistan is 48 percent in 2024-25 and the number of poor is 122 million. As such, Pakistan accounts for half the poverty in the region. Three other countries in MENAAP, namely, Afghanistan, Syrian Arab Republic and Yemen account for another 47 percent below the poverty line.

The World Bank has time series estimates of the incidence of poverty in Pakistan with the poverty line at USD 4.20 per day (2021 PPP), equivalent to Rs 12540 per adult equivalent per month in 2024-25. According to these estimates, 57.2 percent of the people were poor in 2010-11. This declined to 44.7 percent by 2018-19. Unfortunately, it started going up after 2018-19 and rose to 48 percent by 2024-25.

The World Bank has identified a number of adverse shocks and factors which have led to an increase in the incidence of poverty in Pakistan since 2018-19. These include the COVID-19 pandemic, the devastating 2022 floods, a macroeconomic crisis marked by high inflation and currency depreciation in 2022-23, and a prolonged period of economic adjustment that weakened real household incomes and employment opportunities.

This is the appropriate time to highlight some findings from the Household Integrated Economic Surveys (HIES) carried out periodically by the Pakistan Bureau of Statistics. The last two surveys were respectively in 2018-19 and 2024-25.

A comparison of the two surveys also reveals that there has been a major worsening of the income distribution in the country. The real income per household in the bottom quintile has fallen by 15 percent during the six years, while real incomes in the top quintile have remained, more or less, unchanged.

Further, the Population and Housing Census of 2023 has yielded an estimate of the unemployment rate in the year at over 22 percent. This is by far the highest ever estimate of unemployment in Pakistan.

The World Bank has expressed its disappointment at the high and surging rate of poverty incidence in Pakistan, despite having emerged as one of the potential economies in the region that could benefit from artificial intelligence (AI). Also, Pakistan, along with Egypt, Jordan, Morocco and Tunisia, has the technical talent and growing digital ecosystems.

The finding that Pakistan has almost half the poor in the MENAAP region is, no doubt, a very disturbing finding. Already, 48 percent of the population in the country is poor. The impacts of the Middle East War have already led to a rise in the rate of inflation. Supply shortages will also constrain GDP growth. Therefore, it will not be surprising that by the end of 2026-27, half the population of Pakistan falls below the poverty line.

There is need to recognise that almost 80 years after Independence, half of Pakistan’s population is poor. This is truly a tragedy. Over the last many years, successive governments have not prioritized tackling poverty.

The Benazir Income Support Programme is a well-targeted and managed programme. However, its coverage is restricted by financial constraints. Consequently, it covers only 20 percent of the poverty gap in the country. The key policy objective must be to limit the increase in food prices in the country. Unfortunately, the price of the food staple, wheat (atta) has on a year-to-year basis increased by as much as 33 percent. This will push more households below the poverty line.

The time has come to tackle poverty on an emergency basis in the country. The World Bank should also facilitate and support the launching of a regional anti- poverty programme in MENAAP.

Copyright Business Recorder, 2026