Pakistan’s poverty rate has started to climb again after nearly two decades of decline, reflecting profound structural weaknesses in the economy. Poverty, which had fallen from 64.3 percent in 2001 to 21.9 percent in 2018, has risen to about 25.3 percent. Shahid Rasheed Butt, former President of ICCI, said that the reversal is not only due to COVID-19 and floods but also to a fragile growth model unable to sustain long-term gains.

He said poverty reduction relied heavily on informal employment and remittances from overseas workers, providing temporary relief without building resilience. Many households that had escaped poverty slipped back after economic shocks, exposing the weakness of income growth in low-wage sectors.

Economic activity remains consumption-driven rather than based on investment or exports, keeping productivity low and volatility high, the World Bank said in its latest report.

Human development indicators compound the problem. Nearly 40 percent of children under five suffer from stunting, while one in four primary-age children is out of school. The report warns that a poorly educated and unhealthy workforce limits future competitiveness. Access to clean water and sanitation also remains inadequate for millions of households, constraining both health and productivity, he said.

Shahid Rasheed Butt noted that regional disparities remain stark. Rural poverty is more than twice that of urban areas, with Balochistan showing some of the worst deprivation. The Bank notes that poor urban management and weak infrastructure have prevented cities from serving as engines of growth. Fiscal policy has also aggravated inequality; indirect taxes disproportionately burden the poor, while subsidies benefit the wealthy.

 Despite the challenges, there is hope for change. The report calls for fairer taxation, targeted investments in human capital, and stronger safety nets. It emphasizes that the obstacle is not policy design but rather political will, entrenched elite interests, and weak governance, which can be overcome with concerted efforts.

The government must review the World Bank’s findings before finalizing its next poverty reduction strategy. The business leader cautions that without transparent implementation and stronger local governance, these measures may again fall short of reversing the current poverty trend.