WB sees poverty falling to 21.5pc this year

ISLAMABAD (Mudasar Ali Rana) – The World Bank (WB) on Wednesday projected that Pakistan’s poverty rate will decline to 21.5% during the current fiscal year, down from 22.2% last year, according to its latest Pakistan Development Outlook report.

The report highlights that the current account balance stood at 0.3% of GDP in the previous fiscal year while the debt to GDP ratio was 75.9%. For the ongoing fiscal year, the World Bank expects the ratio to slightly improve to 75%. Inflation is forecast to average 7.2% in the current fiscal year, easing to 6.8% next year.

The Bank projects Pakistan’s economic growth rate at 3% for 2024–25, with a modest increase to 3.4% expected in the following year. However, it cautions that the current pace of economic growth remains insufficient to significantly reduce poverty, noting that around 1.6 million young people enter the job market each year.

The report stresses that high tariffs among the highest in the region are hindering exports and limiting Pakistan’s competitiveness in global markets. It calls for comprehensive structural reforms to boost growth, including revenue enhancement, improved investment climate, and public sector efficiency.

The WB urges Pakistan to focus on exchange rate reforms, privatization of state owned enterprises, and reducing public expenditure to strengthen fiscal sustainability. Expanding the tax base, increasing FBR’s capacity, and creating a business-friendly environment are listed as critical steps toward long term stability.

According to the report, Pakistan’s export to GDP ratio remains stuck at 10%, compared to 16% in the 1990s. Over reliance on external borrowing and remittances, combined with complex regulations and high energy costs, has trapped the economy in a boom-and-bust cycle.

Despite challenges, the World Bank notes that industrial recovery and growth in the services sector have supported moderate improvement in economic activity. However, the agriculture sector remains weak due to recent floods and pest attacks, which have limited productivity growth.

The report emphasizes that fiscal discipline and a tight monetary policy have helped contain inflation and improve the current account and primary budget balances. Still, the World Bank warns that continued reform momentum and job creation are essential for sustained economic stability.

For sustainable development, the report calls for greater investment in social protection and infrastructure, along with policies to promote IT and digital services exports. If the reform agenda continues, Pakistan’s economic growth could reach 3.4% by FY2026–27, the World Bank concludes.