For nearly six years, Pakistan debated growth, inflation and reform without updated poverty data. We argued about policy direction but lacked the evidence to judge how those choices were affecting ordinary households. The new poverty estimates from the Household Integrated Economic Survey (HIES) finally bring some clarity and offer a reality check on where the country stands.
The findings are sobering, but not unexpected. After more than a decade of steady improvement between 2001 and 2015, Pakistan’s poverty trajectory has reversed. Poverty now stands at 28.9 per cent in 2024–25, meaning nearly one in three Pakistanis lives below the national poverty line.
These estimates rest on a sound and widely accepted methodology. Pakistan measures poverty using the Cost of Basic Needs approach, based on detailed household consumption data collected through the HIES. Rather than relying on reported income, which often fluctuates and is not always fully captured, this method examines what households actually spend to meet their essential needs.
The poverty line is currently estimated at about Rs8,484 per person per month – the minimum required to afford basic nutrition along with essential non-food needs such as housing, clothing, transport and education. In essence, it tells us whether households can afford a modest but dignified standard of living.
A closer look at the data shows how fragile that standard has become. Poverty remains far more widespread in rural Pakistan, where 36.2 per cent of the population lives below the poverty line, compared with 17.4 per cent in urban areas. Inequality, measured by the Gini coefficient, stands at 32.7 nationally, with Sindh recording the highest disparity among provinces.
Provincial contrasts are striking. Punjab, supported by a more diversified economy and stronger infrastructure, continues to record the lowest poverty incidence among the major provinces. Yet even Punjab has not been spared. As in other provinces, poverty there has also risen by nearly 7 percentage points over the past 6 years. Khyber Pakhtunkhwa and Sindh lie in between, though disparities within each province remain pronounced. Balochistan continues to face the highest poverty levels, reflecting decades of underinvestment, geographic isolation, security challenges, and limited access to public services.
This is not a new pattern. As far back as 2003 and 2009, when SDPI and the World Food Programme published the ‘State of Food Security in Pakistan’ reports, Balochistan was already identified as the country’s most food-insecure province.
Rising inequality makes this picture more troubling. Even as overall growth slowed, its burden did not fall evenly. Those with assets, access and influence were better positioned to protect themselves from rising prices. For wage earners, small farmers and informal workers, incomes did not keep pace with inflation. This divergence reflects long-standing structural imbalances in how economic opportunity and state support are distributed. Access to credit, tax advantages and policy influence remains concentrated.
It is not only that the gains of growth are unevenly shared when the economy performs well. Elite capture also ensures that the most powerful groups remain insulated when growth slows or crises emerge. While ordinary households absorb the full impact of inflation, job losses and economic instability, those with influence are better able to preserve their incomes, protect their assets and shift the burden elsewhere. When this happens, economic downturns deepen poverty rather than merely slowing progress.
Inequality does not just accompany poverty. It reinforces and prolongs it. Its effects are most visible not in macroeconomic aggregates, but in the daily choices households are forced to make. The HIES data show this starkly. Food alone accounts for more than one-third of total household expenditure, while rent and utilities consume over a quarter. After meeting these two essentials, very little remains. Together, food and shelter absorb over sixty per cent of household budgets, leaving less than 6.0 per cent for education and health. This is where inequality translates into lived reality. Families are forced to prioritise immediate survival over long-term investment in their children’s future. Over time, this weakens social mobility and makes it harder to escape poverty.
These pressures did not arise overnight. They reflect a series of shocks that have weakened the fragile economic security of millions of households. The Covid-19 pandemic was the first major disruption. Pakistan adopted a smart lockdown strategy that avoided a complete shutdown of economic activity. This helped limit the damage compared with many other countries. Yet even targeted restrictions disrupted the informal sector, where most Pakistanis earn their livelihoods. Daily wage workers, small traders and service providers saw their incomes fall sharply, and recovery remained uneven.
Just as economic activity began to stabilise, the floods of 2022 destroyed homes, crops and livestock across large parts of the country. Families that had spent years improving their economic position saw their livelihoods disappear in a matter of days. The floods of 2025 have repeated this experience in several districts. These shocks did not merely temporarily reduce incomes. They weakened the productive base on which household stability and recovery depend.
Macroeconomic pressures compounded these shocks. As external imbalances widened and foreign exchange reserves fell, Pakistan was forced to enter successive IMF-supported stabilisation programmes to restore economic stability. These programmes required difficult but necessary adjustments, including exchange rate flexibility, reductions in untargeted subsidies, and alignment of electricity and gas tariffs with actual costs to contain circular debt. As exchange rate controls were eased, the rupee depreciated, raising the domestic cost of imported essentials such as fuel, fertiliser and cooking oil. Higher energy tariffs further increased the cost of transport, food production and basic services. Years of delayed reforms had allowed these imbalances to accumulate, making the eventual adjustment sharper and more difficult for households to absorb. Inflation rose faster than wages and incomes, steadily eroding purchasing power, especially of those least able to protect themselves.
External shocks alone do not fully explain the reversal in Pakistan’s poverty trajectory. Their impact was amplified by deeper structural and governance weaknesses. Economic growth had not generated enough stable, productive jobs, leaving large segments of the workforce vulnerable to disruption. Export performance remained weak, repeatedly exposing the economy to balance-of-payments pressures and painful adjustment periods. Energy sector inefficiencies kept costs high and unpredictable, while limited fiscal space constrained the federal government’s ability to shield households from rising prices.
Social protection programmes such as the Benazir Income Support Programme provided essential relief, but their scale could not fully offset the cumulative impact of inflation and economic disruption. Equally important are provincial fiscal choices. Following the 7th NFC Award, provinces received a substantially larger share from the federal divisible pool. They could have targeted poorer districts through investments in health, education, local infrastructure and climate resilience. Yet the allocation of these resources remained whimsical and did not always prioritise the most vulnerable regions. As a result, structural inequalities persisted, and many districts remained exposed to shocks that pushed already fragile households deeper into poverty.
That said, there is no reason for fatalism. Pakistan has reduced poverty before – and it can do so again. But progress will depend on whether economic policies improve the daily lives of ordinary households. We keep chasing headline growth numbers, yet growth alone does not guarantee that families are better off. What matters to millions living in poverty in Pakistan is whether that growth creates stable jobs, keeps prices manageable and reaches those who need it most.
The writer heads SDPI, chairs the board of the National Disaster Risk Management Fund, and serves on the ADBI’s Advisory Board. He posts on LinkedIn @Abidsuleri
