Islamabad:
The World Bank said Tuesday that Pakistan’s current economic growth model does not support poverty reduction and cause income gains to stop, with poverty already at an eight -year height in 2024.
The “recurring momentum against prosperity: Pakistan’s poverty, justice and resilience assessment” report from the World Bank also revealed that the hopeful middle class, which makes up 42.7% of the population, “struggles to achieve full financial security”.
“The hopeful middle class faces significant non-monetary deprivations, such as limited access to safe sanitation, clean drinking water, affordable energy and housing,” the World Bank said, adding that this points to “poor public service delivery in Pakistan”.
A troubled fact is that 37% of Pakistan youth aged 15 to 24 years are not employed or participate in education or education due to high demographic pressure and incorrect adaptation of work demand.
“Pakistan’s growth model, which supported initial poverty fight, has proved insufficient to maintain progress, and poverty has been increasing since 2021-22,” said the report published here by the World Bank team.
To a question about the World Bank and International Monetary Fund (IMF) responsibility for supporting such a bad economic growth model, Tobias Haque, senior banking economist said that there has not been a single economic growth model followed by Pakistan, which is neither introduced by the World Bank nor the IMF.
“Pakistan’s once promising course of poverty reduction has come to stop and turn years of hard -fought gains,” the report added.
Bolormaa Amgaabazar, World Bank’s Rural Director in Pakistan, said the bank would study, which is why the poverty rate did not fall as fast as was the case in the past. To a question, she added that the economy was not doing well in recent years.
“Recent composite shocks have pushed poverty rates back to an expected 25.3% in the 2023-24 financial year, which is at the highest level of eight years,” according to the report. “In just the last three years, the poverty rate has risen by 7%,” it added.
The report showed two different figures of poverty in Pakistan. According to the official national poverty line, the poverty rate was 25.3%, still the highest in eight years, but the international poverty line showed that the level of poverty was staggering by 44.7%.
Christina Wieser, World Bank’s poverty expert, said the poverty rate from 2001 to 2015 reduced an average of 3% per year, which slowed down to only 1% annually during 2015-18.
She added that more shocks after 2018, including deterioration of macroeconomic conditions, led to a slight increase in poverty in Pakistan.
The report stated that in 2022 the floods caused 5.1% increase in poverty and pushed another 13 million people below the poverty line. It added that the increase in inflation in 2022-23 due to administered increases in energy prices also rapidly reduced the purchasing power and the real incomes of households.
To a question, Christina Wieser, who is also the lead author of the report, said it was too early to assess the impact of the recent floods, but added that “the vulnerability is incredibly high, especially in rural areas and in the agricultural sector”.
Over the past two decades, Pakistan’s economic growth has been low, fleeting and consumption driven, with the real GDP per year. Per capita that only grows 2% annually, which is half of the regional average.
Perverted institutional incentives and Elite capture Border Pakistan’s expansion of its production ability and the audience out of productive investments to evenly distribute the benefit of economic growth.
Geographical poverty
The report showed that the geographical inequalities persisted as another critical challenge of rural poverty, which stood at 28.2% compared to 10.9% in the urban areas. There were also surprising provincial differences with Balochistan that face 42.7% poverty compared to 25.3% national average.
Punjab has the lowest poverty rate of 16.3% among all provinces, but still houses 40% of the total poor people due to being the most populated federal unity. Poverty rate in Sindh is 24.1%, followed by 29.5% in Khyber Pakhtunkhwa.
The report also sheds light on the growing income inequality in Pakistan. It said that the true size of the income inequality in Pakistan is difficult to determine because the richest families are under -reporting their income, especially income from the rent is not caught correctly.
On the consumption patterns, the richest families consume more than four times the poorest households. But the World Bank said that by using FBR’s data, the true income adhesive can still be assessed.
The regional differences were also large. Seven of the 10 poorest districts are in Balochistan. However, due to population density, three of the five districts with the largest absolute number of poor people are in Punjab. Each of these districts – Muzaffargarh, Rahim Yar Khan and Dera Ghazi Khan – has more than 1 million poor people.
Districts that lagged decades ago remain behind today, creating anchored geographical differences in public services, resources and opportunities. Poverty rates range from 3.9% in Islamabad to 76.9% in Tharparkar, according to the report.
Urban population underestimated
The report revealed that the official number that 39% of the total population lives in urban areas is also underestimated. “Geospatial ‘degree of urbanization approach” shows that Pakistan is 60-80% Urban VS 39% officially, “the report said.
After adding cities, 88% of the population resides in urban areas, said Christina Wieser, the World Bank’s poverty expert. Unplanned urbanization has led to ‘sterile agglomeration’ – close settlements with limited improvements in productivity or living standards, she added.
The World Bank has recommended strengthening the basis for sustainable growth, but it requires extensive structural reforms that ensure macro-financial stability and promote the private sector-led development essential for any political path to prosperity.
“Some of the structural challenges we have seen in recent years have been lasting, but some improvements are noted in recent months, Tobias said.
While shedging light on the reduction in poverty from 2001 to 2015, the World Bank said non-agricultural income has driven poverty reduction in the last two decades, which contributed 57% of poverty reduction during the period. Agricultural work contributed only 18% in poverty reduction. The social transfers contributed only 2% in poverty reduction.
The report said that despite their positive contribution to household welfare, transfers only a small segment of the population. Remitting currents are also unevenly distributed; Households in rural and low -income are mostly recipients of domestic transfers.
The labor market is also dominated by informal, low paying jobs with over 85% of employment informal. Urban Men mostly work in low -wage wage jobs in construction, transport or trade, while men in rural areas change from stagnant agriculture to low productivity outside the farm.
Women and adolescents largely excluded from the workforce and female workforce participation (FLFP) are very low at 25.4%, Wieser said.
Most households remain together at relatively low welfare levels, creating high vulnerability to shock. The World Bank said that the design of Pakistan’s fiscal system has historically not supported poverty and inequality reduction.
“It will be critical to protect Pakistan’s hard-won poverty gains as they accelerate reforms that expand jobs and opportunities-Iste to women and young people,” said Bolormaa Amgaabazar, World Director of the World Bank country for Pakistan.
