Stark findings in the Bank’s regional update: Pakistan poverty
Pakistan accounts for about 48 per cent of the people living below the $3-a-day poverty line across the Middle East, North Africa, Afghanistan and Pakistan region, the World Bank has said.
In its latest regional economic update, titled *From Divide to Opportunity: AI, Jobs, and Growth*, the Bank painted a sobering picture of rising poverty, higher fuel prices and debt risks following the closure of the Strait of Hormuz.
The conflict that began in February 2026 has pushed up energy costs across the region, with Pakistan among the countries where gasoline and diesel prices have risen sharply. The Bank said gasoline prices had increased by 40 per cent or more in Pakistan, Lebanon, Syria and the United Arab Emirates. Diesel prices in Pakistan had also risen by more than 40 per cent.
Poverty on the rise
Pakistan’s poverty rate increased by 6.4 percentage points at the $3-a-day threshold and 3.2 percentage points at the $4.20-a-day line between fiscal years 2018-19 and 2024-25. The Bank linked the rise to successive shocks, including the COVID-19 pandemic, the 2022 floods, high inflation, currency depreciation and prolonged economic adjustment.
Across the MENAAP region, 14.3 per cent of the population lived on less than $3 a day in 2024, compared with 10.4 per cent globally. The Bank expects adverse poverty trends to continue through 2026, with poverty increasingly concentrated in conflict-affected and fragile economies.
Pakistan is also facing significant debt or financing challenges, alongside Algeria, Djibouti, Iraq and Morocco, according to the report.
Growth forecast below target
The Bank projected Pakistan’s GDP growth at 3.8 per cent in 2027, below the government’s 4 per cent target. Inflation is expected to rise to 8.2 per cent in 2027 from 7.1 per cent in 2026. Per capita GDP growth is projected to edge up to 2.2 per cent in 2027 from 2.1 per cent in 2026, while the current account deficit is forecast to widen to 0.8 per cent of GDP and the fiscal deficit to reach 3.5 per cent.
Pakistan also faces risks from weaker economic activity in Gulf countries. A prolonged slowdown in tourism, construction and related services could cut demand for foreign workers and weaken remittance flows to labour-sending economies, particularly Pakistan.
Climate risks add another layer of pressure, with changing monsoon patterns, heat stress, irregular rainfall, drought and localised flooding threatening agricultural output.
The AI opportunity
Despite the pressures, the Bank identified opportunities for Pakistan in artificial intelligence. The country produces an estimated 75,000 IT graduates a year and recorded $4.6 billion in information and communication technology services exports in fiscal year 2025-26.
Its planned $1 billion AI programme through 2030 includes shared computing infrastructure, a sovereign multilingual model, 1,000 AI PhD scholarships and training for one million non-IT professionals.
The Bank warned, however, that Pakistan’s AI ambitions could be held back by weak innovation, gaps in broadband and electricity access, and limited local-language training data. Only 3 per cent of firms reported product innovation and 1 per cent reported process innovation, compared with averages of 23 per cent and 14 per cent among lower-middle-income peers.
Affordable AI applications designed for basic mobile devices, low-bandwidth connections and intermittent power could help expand adoption in agriculture, health and education, the report said.
Frequently asked questions
What poverty line does the World Bank use here?
The report uses the $3-a-day and $4.20-a-day thresholds for the MENAAP region, with Pakistan holding about 48 per cent of those below the $3 line.
Why did Pakistan’s poverty rate rise?
The Bank points to the pandemic, the 2022 floods, high inflation, currency depreciation and prolonged economic adjustment between FY2018-19 and FY2024-25.
What growth does the Bank forecast for Pakistan?
GDP growth of 3.8 per cent in 2027, below the government’s 4 per cent target, with inflation expected at 8.2 per cent.
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Originally reported by propakistani.pk.
