Islamabad:
The World Bank said on Tuesday that Pakistan’s current economic growth model does not support poverty reduction, causing the dropout of income gains, poverty already at an eight -year summit in 2024.
The report on poverty, the assessment of equity and the resilience of Pakistan, the report on poverty, the evaluation of capital and the resilience of Pakistan revealed that the middle class in grass, which constitutes 42.7% of the population, has “struggling to reach complete economic security”.
“The middle class in grass is faced with significant non -monetary deprivation, such as limited access to safe sanitation, drinking water, energy and affordable housing,” said the World Bank, adding that this indicates “poor delivery of public services in Pakistan”.
A disturbing fact is that 37% of young people in Pakistan, aged 15 to 24, are not employed or do not participate in education or training due to high demographic pressures and the metement of demand for labor.
“Pakistan’s growth model, which has supported the initial poverty reduction, has proven to be insufficient to support progress and poverty has been increasing since 2021-222,” said the report published here by the World Bank team.
To a question on the responsibility of the World Bank and the International Monetary Fund (IMF) concerning the support of such a mediocre economic growth model, Tobias Haque, principal economist of the World Bank, said that there was not a unique economic growth model followed by Pakistan, which is not imposed by the World Bank or the IMF.
“Pakistan’s formerly promising, formerly promising poverty reduction trajectory, has ended up, reversing years of hard earnings,” added the report.
Bolormaa Amgaabazar, director of the World Bank country in Pakistan, said that the bank wanted to study why the poverty rate did not drop as quickly as in the event in the past. To a question, she added that the economy has not been going very well in recent years.
“Recent reduction shocks have pissed off poverty rates to a 25.3% projection during the 2023-24 fiscal year, which is at the highest level in eight years,” said report. “In the past three years only, the poverty rate has increased by 7%,” he 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 has shown that the level of poverty was amazing at 44.7%.
Christina Wieser, the poverty expert from the World Bank, said that from 2001 to 2015, the poverty rate had decreased on average by 3% per year, which slowed down to only 1% per year in 2015-2018.
She added that multiple Post 2018 shocks, including the deterioration of macroeconomic conditions, led to a slight increase in poverty in Pakistan.
The report indicated that the floods of 2022 caused a 5.1% increase in poverty and pushed 13 million additional people below the poverty line. He added that the increase in inflation 2022-23 due to the administered increase in energy prices has also quickly reduced purchasing power and real household income.
To a question, Christina Wieser, who is also the main author of the report, said that it was too early to assess the impact of recent floods, but added that “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, volatile and consumption focused, with real GDP per capita only increasing 2% per year, which represents half the regional average.
Perverse institutional incentives and the elite capture limit expansion by Pakistan to its production capacity and reduce productive investments to distribute the benefit of economic growth fairly.
Geographic poverty
The report has shown that geographic inequalities persist as another critical challenge with rural poverty of 28.2% against 10.9% in urban areas. There were also surprising provincial disparities with Balutchistan faced with 42.7% of poverty, compared to 25.3% of national average.
Punjab has the lowest poverty rate of 16.3% among all the provinces, but still shelters 40% of the total poor due to the most populous federating unit. The poverty rate in the Sindh is 24.1%, followed by 29.5% in Khyber Pakhtunkhwa.
The report has also highlighted the growing inequality of income in Pakistan. He said that the real scale of income inequality in Pakistan is difficult to determine because the richest families underestimate their income, in particular rent income, is not properly captured.
On consumption models, the richest families consume the poorest households more than four times. But the World Bank said that using FBR data, the real inequality of income can still be assessed.
Regional disparities were also large. Seven of the 10 poorest districts are in Balutchistan. However, due to population density, three of the five districts with the greatest absolute number of poor are in Punjab. Each of these districts – Muzaffargarh, Rahim Yar Khan and Dera Ghazi Khan – have more than a million poor.
The districts that are lagging behind decades ago today, creating geographic disparities rooted in public services, resources and opportunities. Poverty rates vary from 3.9% to Islamabad to 76.9% at Tharparkar, according to the report.
Underestimated urban population
The report revealed that the official number that 39% of the total population lives in urban areas is also underestimated. The “degree of geospatial urbanization” approach shows that Pakistan is 60 to 80% urban VS 39% officially “said the report.
After adding cities, 88% of the population lies in urban areas, said Christina Wieser, the poverty expert from the World Bank. Unforeseen urbanization has led to a “sterile agglomeration”-dense colonies with a limited improvement in productivity or standard of living, she added.
The World Bank has recommended the strengthening of sustainable growth foundations, but it requires complete structural reforms that guarantee macro -affair stability and promote development led by the private sector – essential to any political path to prosperity.
“Some of the structural challenges we have seen in recent years have remained persistent, but a certain improvement has been noted in recent months, said Tobias.
While highlighting poverty reduction from 2001 to 2015, the World Bank said that non -agricultural income has led to poverty reduction over the past two decades, which has contributed 57% to poverty reduction during the period. Agricultural workforce only contributed 18% to poverty reduction. Social transfers contributed to 2% in poverty reduction.
The report indicates that despite their positive contribution to the well-being of households, the sending of funds only reach a small segment of the population. Payment flows are also unevenly distributed; Rural and low -income households are mainly beneficiaries of domestic funds.
The job market is also dominated by informal and poorly paid jobs with more than 85% of informal employment. Urban men work mainly in low -paid wage jobs in construction, transportation or trade, while rural men go from stagnant agriculture to low productivity outside the prison.
Women and young people are widely excluded from labor market participation and active population (FLFP) is very low at 25.4%, Wieser said.
Most households remain grouped at relatively low levels of well-being, creating a high vulnerability to shocks. The World Bank said that historically, the conception of Pakistan’s budgetary system has not supported poverty and the reduction of inequality.
“It will be essential to protect the gains from the hard poverty of Pakistan while accelerating reforms that widen jobs and opportunities – especially for women and young people,” said Bolormaa Amgaabazar, director of the country of Pakistan.
