Pakistan’s fragile economic recovery masks a troubling social reality: poverty and inequality are rising at an alarming pace. After nearly two decades of gradual improvement, the country has witnessed a sharp reversal in its poverty trajectory. A combination of record inflation, sluggish economic growth, repeated International Monetary Fund (IMF) bailout programmes, the COVID-19 pandemic, a steep currency depreciation and two catastrophic floods have pushed millions of families back below the poverty line.
According to the latest estimates for 2024-25, Pakistan’s poverty rate has climbed to 28.9 percent. In a country of approximately 240 million people, this translates into nearly 69.4 million individuals living below the official poverty threshold. The figures, compiled by the Poverty Estimation Committee using data from the Household Integrated Economic Survey (HIES) conducted by the Pakistan Bureau of Statistics (PBS), paint a sobering picture of mounting economic distress.
The increase represents a seven-percentage-point jump from 21.9 percent in 2019. The poverty line itself has also risen sharply due to inflation. Adjusted for consumer price increases, the monthly poverty threshold now stands at Rs8,484 per adult equivalent in FY25, compared to Rs3,757 in FY19. This dramatic rise underscores how inflation has eroded purchasing power, pushing households that were once marginally above the poverty line into vulnerability.
The surge in poverty has been accompanied by a widening income gap. Inequality, measured by the Gini coefficient, has increased from 28.4 percent in FY19 to 32.7 percent in FY25. This indicates that wealth and income have become more unevenly distributed, with the benefits of economic activity accruing disproportionately to a smaller segment of society.
Political leaders, however, have not hesitated to assign responsibility. Planning Minister Ahsan Iqbal has argued that what he describes as consumption-led growth during the previous administration created structural imbalances that later destabilized the economy. Yet beyond political debate, the data reflect broader systemic weaknesses that transcend party lines.
To appreciate the scale of the reversal, it is important to recall the progress made in earlier years. Poverty declined steadily from 50.4 percent in 2005-06 to 21.9 percent in 2018-19. That long-term reduction was driven by economic expansion, remittance inflows, social protection programmes and relative macroeconomic stability. The recent uptick, therefore, represents not just a cyclical fluctuation but a significant setback to hard-won gains.
Provincial data reveal that poverty has risen across the board, though at varying rates. Sindh has experienced the sharpest increase, with poverty climbing from 24.5 percent in FY19 to 32.6 percent in FY25 — an 8.1 percentage-point rise. Punjab saw poverty grow from 16.5 percent to 23.3 percent over the same period, while Khyber Pakhtunkhwa’s rate increased from 28.7 percent to 35.3 percent. Balochistan, already the poorest province, recorded an increase from 41.8 percent to 47 percent, meaning nearly half its population now lives below the poverty line.
Rural areas have been hit particularly hard. National rural poverty has surged from 28.2 percent to 36.2 percent, reflecting the combined effects of agricultural disruptions, flood damage and rising input costs. Urban poverty has also grown, from 11 percent to 17.4 percent, as inflation in food, energy and housing squeezes city dwellers. The inequality gap has widened in both rural and urban settings, reinforcing the sense that economic strain is widespread and deepening.
Several structural factors underpin these trends. Pakistan has relied heavily on external borrowing to stabilize its economy, entering three IMF-supported programmes in recent years. While these arrangements have helped avert default, they have also required fiscal tightening, higher utility tariffs and subsidy reductions — measures that disproportionately affect lower-income households.
Meanwhile, the COVID-19 pandemic disrupted livelihoods, especially for daily wage earners and informal workers. Just as the economy began to recover, devastating floods destroyed crops, homes and infrastructure, compounding rural distress. Simultaneously, the depreciation of the rupee increased the cost of imported goods and fuel, fueling inflation that reached multi-decade highs.
One stark comparison highlights the structural imbalance: over nine million overseas Pakistanis contribute roughly $40 billion annually in remittances, while the country’s total exports of goods and services hover around the same figure. In essence, a relatively small diaspora generates as much foreign exchange as the entire domestic export sector. Without a shift toward export-led growth and productivity enhancement, sustainable poverty reduction will remain elusive.
Addressing poverty in Pakistan requires more than short-term relief measures. It calls for macroeconomic stability, investment in human capital, agricultural modernization, industrial competitiveness and targeted social safety nets. Expanding export capacity, improving governance and reducing policy uncertainty are equally crucial.
The latest poverty figures are more than statistics; they represent millions of families struggling to afford basic necessities. Reversing this trend will demand coordinated reforms, political consensus and a renewed focus on inclusive growth. Pakistan has demonstrated in the past that poverty can be reduced. The challenge now is to rebuild resilience and ensure that economic recovery translates into real improvements in people’s lives.