Islamabad:
The World Bank said Tuesday that Pakistan’s current economic growth model does not support poverty reduction, which causes income profits to stop, with poverty already in a maximum of eight years in 2024.
The report of ‘claiming the impulse towards prosperity: the report of poverty, equity and resilience of Pakistan of the World Bank revealed that the middle class candidate, which constitutes 42.7% of the population, is “struggling to achieve full economic security.”
“The middle class candidate faces important non -monetary deprivations, such as limited access to safe sanitation, clean drinking water, affordable energy and housing,” said the World Bank, adding that this points to “a bad provision of public services in Pakistan.”
A worrying fact is that 37% of the young people of Pakistan, between 15 and 24 years old, do not use or participate in education or training due to high demographic pressures and the misalignment of labor demand.
“The Pakistan growth model that supported the reduction of initial poverty has proven insufficient to maintain progress and poverty is increasing since 2021-22,” said the report published here by the World Bank team.
To a question about the responsibility of the World Bank and the International Monetary Fund (IMF) with respect to supporting such a poor economic growth model, Tobias Haque, a senior economist of the World Bank, said there has not been a unique economic growth model followed by Pakistan, which is imposed by the World Bank or the IMF.
“The promising time for Pakistan’s poverty reduction, he has stopped worrying, reverting years of at odds,” the report added.
Bolormaa Amgaabazar, world bank director in Pakistan, said the bank wanted to study why the poverty rate did not fall as fast as the case in the past. To a question, he added that the economy was not very good in recent years.
“Recent composition shocks have led to poverty rates at 25.3% projected in fiscal year 2023-24, which is at the highest level in eight years,” according to the report. “In the last three years, 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%, the highest in eight years, but the international poverty line showed that the level of poverty was amazing in 44.7%.
Christina Wieer, a poverty expert from the World Bank, said that from 2001 to 2015, the poverty rate was reduced on average in 3% per year, which decreased to only 1% per year during 2015-18.
He added that the multiple clashes after 2018, including deterioration in macroeconomic conditions, led to a slight increase in poverty in Pakistan.
The report stated that 2022 floods caused a 5.1% increase in poverty and pushed 13 million additional people below the poverty. He added that the 2022-23 increase in inflation due to increases administered in energy prices also quickly reduced purchasing power and real homes of households.
For a question, Christina Wieer, who is also the main author of the report, said it was too early to evaluate the impact of recent floods, but added that “vulnerability is incredibly high, especially in rural areas and in the agricultural sector.”
In the last two decades, Pakistan’s economic growth has been low, volatile and driven by consumption, with real per capita GDP that grows only by only 2% per year, which is half of the regional average.
Perverse institutional incentives and elite capture limit Pakistan’s expansion of their productive capacity and displace productive investments to equally distribute the benefit of economic growth.
Geographical poverty
The report showed that geographical inequalities persisted as another critical challenge with rural poverty of 28.2% compared to 10.9% in urban areas. There were also surprising provincial disparities with Baluchistan faced by 42.7% poverty compared to the national average of 25.3%.
Punjab has the lowest poverty rate than 16.3% among all provinces, but still houses 40% of the total poor people due to being the most populous feeding unit. The poverty rate in Sindh is 24.1%, followed by 29.5% in Khyber Pakhtunkhwa.
The report also shed light on the growing inequality of income in Pakistan. He said that the true magnitude of income inequality in Pakistan is difficult to determine because the richest families report their income, particularly rental income is not properly captured.
In consumption patterns, the richest families consume more than four times the poorest households. But the World Bank said that when using FBR data, true income inequality can still be evaluated.
Regional disparities were also vast. Seven of the 10 poorest districts are found in Baluchistan. However, due to population density, three of the five districts with the largest absolute number of poor are in Punjab. Each of these districts, Muzaffarhh, Rahim Yar Khan and Dera Ghazi Khan, have more than 1 million poor people.
The districts that were delayed decades ago stay today, creating geographical disparities rooted in public services, resources and opportunities. Poverty rates vary from 3.9% in Islamabad to 76.9% in Tharparkar, according to the report.
Discrete urban population
The report revealed that the official number that 39% of the total population lives in urban areas is also underestimated. The “Geospatial Urbanization Degree” approach shows that Pakistan is 60-80% urban compared to 39% officially “officially.”
After adding the cities, 88% of the population resides in urban areas, said Christina Wieer, a poverty expert from the World Bank. The unplanned urbanization has led to the ‘sterile agglomeration’: dense settlements with limited improvements in productivity or living standards, he added.
The World Bank has recommended the strengthening of the foundations for sustainable growth, but requires comprehensive structural reforms that guarantee macro-fiscal stability and promote development led by the private sector, essential for any policy towards prosperity.
“Some of the structural challenges we have seen in recent years have remained persistent, but some improvements are observed in recent months, Tobias said.
While threw light on poverty reduction from 2001 to 2015, the World Bank said that non -agricultural income has driven poverty reduction in the last two decades, which contributed 57% in poverty reduction during the period. Agricultural work contributed only to 18% in poverty reduction. Social transfers simply contributed 2% in poverty reduction.
The report said that despite its positive contribution to the welfare of the home, remittances reach only a small segment of the population. Remittance flows are also distributed unequally; Rural and low -income households are mainly receptors of domestic remittances.
The labor market is also dominated by informal and low -payment jobs with more than 85% of informal employment. Urban men work mainly in low salary work in construction, transport or trade, while rural men change from stagnant agriculture to low labor productivity outside the farm.
Women and young people largely excluded from the workforce and female participation of the workforce (FLFP) are very low in 25.4%, Wieser said.
Most households remain grouped at relatively low levels of well -being, creating high vulnerability to clashes. The World Bank said that historically, the design of the Pakistan fiscal system has not supported poverty and the reduction of inequality.
“It will be essential to protect poverty gains won with so much effort from Pakistan while accelerating reforms that expand jobs and opportunities, especially for women and young people,” said Bolormaa Amgaabazar, country director of the World Bank for Pakistan.
