Pakistan’s poverty situation has come under renewed scrutiny after fresh estimates suggested that the scale of deprivation may be significantly higher than official figures indicate. The Social Policy and Development Centre (SPDC) has placed the country’s poverty rate at 43.5 percent, sharply exceeding the 28.9 percent reported by the Pakistan Bureau of Statistics (PBS) based on the latest Household Integrated Economic Survey for 2024–25. This substantial divergence has reignited debate over how poverty is measured and whether existing methods accurately capture the lived realities of millions of households.
At the core of the discrepancy lies a fundamental difference in methodology. The SPDC relies on a calorific or food energy intake approach, which defines poverty in terms of the minimum daily caloric requirements necessary for basic survival. It then estimates the level of household expenditure required to meet these needs. In contrast, the PBS employs the cost of basic needs approach, which updates the poverty line using the Consumer Price Index (CPI) rather than recalculating it based on fresh household consumption data. While both methods are widely used, they often yield different outcomes, particularly in economies experiencing rapid inflation and structural changes.
The calorific method used by SPDC aligns closely with the approach adopted by the World Bank, which has also presented a more alarming picture. In its recent assessment, the World Bank estimated Pakistan’s poverty rate at 42.4 percent for 2025, using a threshold of $3.65 per day adjusted for purchasing power parity. The Bank attributed this sharp increase to prolonged economic instability, high inflation, and a series of overlapping crises that have undermined earlier gains in poverty reduction. According to its analysis, population growth of around 2 percent annually has further compounded the problem, pushing an estimated 1.9 million additional people into poverty in the last fiscal year alone.
Beyond methodological differences, the SPDC has raised concerns about the adequacy of the CPI as a tool for measuring poverty. It argues that the consumption basket used to calculate inflation is largely based on the spending patterns of relatively better-off households. As a result, it may fail to reflect the actual expenses faced by low-income families, particularly those living in rural or remote areas. Essential costs such as informal healthcare, access to clean drinking water, and regional price variations are often underrepresented or ignored altogether. This, the Centre contends, leads to an underestimation of the true cost of living for the poor.
Data limitations have also been acknowledged at the international level. The International Monetary Fund (IMF), in its December 2024 loan documentation, highlighted significant shortcomings in Pakistan’s statistical systems. It noted that gaps remain in data covering sectors that account for nearly one-third of the country’s GDP, along with issues related to the reliability and detail of government finance statistics. In response, the IMF has extended technical assistance to the PBS, supporting efforts to improve data collection and develop new indices, including a Producer Price Index. Additionally, large-scale surveys are currently underway as part of preparations for the rebasing of national accounts, expected to be completed by mid-2026.
Despite some signs of macroeconomic stabilisation, the broader economic environment remains insufficient to reduce poverty meaningfully. The World Bank has pointed out that economic growth of around 2.6 percent is simply too low to generate the level of job creation and income expansion needed to lift large segments of the population out of poverty. While remittance inflows have increased significantly—rising by 33 percent in the first half of fiscal year 2025—their benefits are unevenly distributed. Only a small fraction of the poorest households receive remittances, limiting their impact on those most in need.
However, remittances do play an important role for households that are just above the poverty line. For these vulnerable groups, financial support from abroad can act as a buffer against economic shocks, preventing them from slipping into poverty. The recent rise in outward migration, particularly among low-skilled workers, may gradually expand the reach of remittances to poorer segments of society, although this is likely to be a slow and uneven process.
On the policy front, social protection programmes have provided some relief. The government has increased payments under the Benazir Income Support Programme (BISP) beyond the rate of inflation and plans to extend coverage to an additional 500,000 households by the end of the fiscal year. These measures are expected to support consumption among low-income families and offer some protection against short-term economic pressures. Nevertheless, such interventions remain limited in scale relative to the magnitude of the poverty challenge.
Recent global developments have further complicated the situation. The ongoing conflict in the Middle East has introduced new economic uncertainties, including rising energy prices and disruptions to trade. These factors have the potential to fuel inflation and reduce economic activity, thereby eroding the effectiveness of domestic policy measures aimed at protecting vulnerable populations. While diplomatic efforts to de-escalate tensions are ongoing, the risk of further escalation remains, posing additional threats to economic stability.
The widening gap between different poverty estimates underscores the urgent need for a more comprehensive and accurate measurement framework. Without reliable data, policymakers face significant challenges in designing targeted interventions and allocating resources effectively. It also raises broader questions about the inclusiveness of economic growth and whether existing policies are reaching those who need them most.
In conclusion, Pakistan stands at a critical juncture in its fight against poverty. While official figures suggest moderate progress, alternative estimates paint a far more troubling picture. The divergence highlights not only methodological issues but also deeper structural challenges within the economy. Addressing poverty will require more than statistical adjustments; it demands sustained economic growth, improved data systems, and a stronger commitment to inclusive policies. Without these, the risk is that a significant portion of the population will remain trapped in a cycle of deprivation, even as headline economic indicators show signs of improvement.