DRAWING on 25 years of household survey data and five years of analytical work, the World Bank’s report “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment (PERA),” released in late September 2025, delivers a comprehensive evaluation of Pakistan’s development trajectory. It serves as both a diagnostic overview and a strategic roadmap, highlighting the country’s stalled progress in poverty reduction and the deepening challenges of inequality and vulnerability. By integrating long-term data with fresh insights on disparities, fiscal dynamics and urbanization, the report underscores that Pakistan’s current growth model is no longer adequate to sustain inclusive development. It calls for urgent reforms across governance, labour markets, human capital and public service delivery to reclaim lost momentum and build resilience in the face of persistent economic and environmental shocks.
The World Bank report notes that between 2001 and 2018, Pakistan made progress in reducing poverty, slashing the rate from 64.3% to 21.9%. However, this momentum has not only stalled but reversed. By 2023/24, poverty is projected to rise to 25.3%, driven by economic stagnation, underemployment and repeated crises. The discrepancy between national poverty estimates and the World Bank’s International Poverty Index – 25.3% versus 45%, suggests that official figures may understate the true extent of deprivation, particularly among the wealthiest households who are often underrepresented in surveys. The report identifies several structural weaknesses that have contributed to this regression. Key sectors such as agriculture and construction are underperforming. Investment remains weak and fiscal deficits continue to rise.
Governance and taxation challenges further compound the problem. Local governments are failing to deliver essential services and the tax burden disproportionately affects lower-income groups. Political instability has eroded business confidence, making it harder to attract investment. The labour market is characterized by low productivity and informality, with over 85% of jobs lacking formal protections. Women and youth remain largely excluded, representing a significant untapped economic potential. Human capital deficits are another critical concern. Nearly 40% of children are stunted, one-quarter of primary-school-aged children are out of school and a staggering 75% of those enrolled cannot comprehend a simple story by the end of primary school.
Spatial inequality is a persistent and deeply entrenched issue. Rural poverty is more than twice as high as urban poverty and many districts that lagged behind decades ago continue to do so. Unplanned urbanization has led to “sterile agglomeration” densely populated settlements with poor living standards and limited economic dynamism. These disparities reflect the failure of regional development policies and the need for targeted interventions to uplift marginalized areas. The report also critiques Pakistan’s trade and industrial policies. Over the past decade, import tariffs and regulatory duties were increased by 117%, thereby promoting inefficient industrial strategies. This shift favored influential groups over productive sectors and contributed to a decline in exports. In the 1990s, exports accounted for 15% of GDP; by 2024, they had fallen to just 10%, the lowest in the region. The World Bank attributes this decline to structural weaknesses and external shocks, including the COVID-19 pandemic, global commodity price surges and the catastrophic 2022 floods.
Inflation remains one of Pakistan’s most severe challenges. In September 2023, consumer prices surged by 31.4% year-on-year, up from 27.4% the previous month. Although inflation temporarily eased to 6.9% by September 2024 due to lower food and energy prices. The report warns that inflation is likely to rise again through 2027 as floods disrupt food supply chains, further straining household budgets and deepening inequality. Remittances have provided a partial cushion, reaching a record 9.3% of GDP in FY25. However, their reach among the poorest households remains limited, with only 3.2% receiving remittance income.
Looking ahead, Pakistan’s economic growth is expected to remain modest, projected at 2.6% in FY2025-26. Severe floods are anticipated to reduce agricultural output in Punjab by at least 10%, affecting key crops such as rice, sugarcane, cotton, wheat and maize. These disruptions will likely exacerbate inflationary pressures, further challenging poverty alleviation efforts. Despite these daunting challenges, the report identifies several pathways to reclaim momentum. These include investing in people and places, building resilience and adopting progressive fiscal policies. Notably, removing barriers to female labour force participation could increase GDP per capita by 20 to 30%. The World Bank recommends a suite of reforms to boost exports and investor confidence, including a free foreign exchange regime, affordable energy, accessible financing and improvements in bankruptcy laws. In essence, “Reclaiming Momentum Towards Prosperity” is both a diagnosis and a roadmap. It lays bare the systemic issues undermining Pakistan’s development and offers actionable solutions to address them. However, the success of these recommendations hinges on political will, institutional capacity and a commitment to inclusive growth. Without decisive action, Pakistan risks further entrenching poverty and inequality, squandering the gains of previous decades and dimming the prospects of future generations.
— The writer is an educator, based in Sindh.
