Poverty & Equity Brief

South Asia

Pakistan
October 2023

As of 2023, poverty is expected to increase to 39.4 percent (US$3.65/day 2017 PPP) from 34.2 percent in 2022 - a five percentage-point
increase. The significant increase in poverty shows how multiple shocks a challenging macroeconomic environment leading to a
contraction in real GDP, record-high food and energy prices, and the catastrophic impact of the 2022 floods in the absence of effective
coping mechanisms, have led to declining economic activity and real incomes. In fact, increased spending on social transfers, including a 25
percent increase in cash payments under the Benazir Income Support Program, an increase in beneficiaries from 7.7 to 9 million, and several
one-off targeted payments, were insufficient to protect the vulnerable from falling into poverty and the poor from getting poorer. Thus,
considering population growth, there are now 12.5 million more Pakistanis below the poverty line compared to 2022.
Labor market incomes remain the primary income source for households but are constrained by a structurally low labor force participation
rate (particularly among women), a scarcity of high-productivity jobs, and widespread informality. During 2022-23, anemic growth in
agriculture and a contraction in industry and trade sectors, which employ 80 percent of poor workers, reduced labor incomes, contributing
to worsening poverty and vulnerability to poverty. Apart from declines in real income, food inflation nearly tripled, reaching an average of
38.7 percent in 2022-23. This shrunk the purchasing power of households, particularly the poor who spend half their budget on food. Due to
differing consumption patterns, households in the poorest decile experienced a 7 percentage-point higher inflation rate than the richest
decile.
Non-monetary dimensions of poverty have also worsened. The floods predominantly affected poorer districts, causing extensive damage to
public and private infrastructure, including health and education centers. For example, the floods caused significant learning losses for over
2.6 million enrolled children, and one-third of the population in the worst-affected districts reported inaccessible healthcare services.
Moreover, disrupted access to improved drinking water and safe sanitation increased risks of stunting and malnutrition. This has far-
reaching implications for child development and human capital accumulation in a country where 40 percent of children under five are
stunted.
Monetary inequality has remained relatively stable in the past two decades. However, the Gini index is projected to reach 30.7 in 2022-23,
an increase of 1.5 points over the previous year, showing that poorer households were affected worse by high food inflation and the
devastating floods. Furthermore, spatial disparities are systematic, complex, and persistent, with monetary deprivation overlapping with
lagging human development outcomes. Rural poverty is twice as high as urban, and district poverty rates range widely, from 3.9 percent in
Islamabad to 71.5 percent in Khuzdar.

Number of Poor Rate

POVERTY (million) (%)
Period

National Poverty Line 46.5 21.9 2018

International Poverty Line
10.8 4.9 2018
78.1 in Pakistan rupee (2018) or US$2.15 (2017 PPP) per day per capita
Lower Middle Income Class Poverty Line
87.5 39.8 2018
132.5 in Pakistan rupee (2018) or US$3.65 (2017 PPP) per day per capita
Upper Middle Income Class Poverty Line
185.7 84.5 2018
248.7 in Pakistan rupee (2018) or US$6.85 (2017 PPP) per day per capita
Multidimensional Poverty Measure 16.7 2018
SHARED PROSPERITY

Annualized Consumption Growth per capita of the bottom 40 percent 1.34 2013-2018
INEQUALITY

Gini Index 29.6 2018

Shared Prosperity Premium = Growth of the bottom 40 - Average Growth 0.09 2013-2018
GROWTH

Annualized GDP per capita growth 3.69 2013-2018

Annualized Consumption Growth per capita from Household Survey 1.25 2013-2018
MEDIAN INCOME

Growth of the annual median income/consumption per capita 1.00 2013-2018

Sources: WDI for GDP, National Statistical Offices for national poverty rates, PIP as of October 2023, and Global Monitoring Database for the rest.

Poverty Economist: Moritz Meyer

POVERTY HEADCOUNT RATE, 2001-2018 INEQUALITY TRENDS, 2001-2018
Gini Index

120 6 35.0

100 5 30.0

25.0
80 4

20.0
60 3
15.0
40 2
10.0

20 1
5.0

0 0 0.0
2001 2003 2005 2007 2009 2011 2013 2015 2017 2001 2003 2005 2007 2009 2011 2013 2015 2017
Poverty rate International Poverty Line Lower Middle IC Line GDP per capita,
(%) Upper Middle IC Line National Poverty Line $ 2017 PPP
GDP (Thousand)

Note: Poverty estimates based on HIES 2018-19 include former FATA regions
Source: World Bank using HIES/SARMD/GMD Source: World Bank using HIES/SARMD/GMD

KEY INDICATORS
Lower Middle Income line(%) Relative group (%)
Distribution among groups: 2018 Multidimensional Poverty Measures: 2018 (% of population)
Non-Poor Poor Bottom 40 Top 60
Urban population 77 23 23 77 Monetary poverty (Consumption)
Rural population 50 50 50 50 Daily consumption less than US$2.15 per person 4.9
Males 60 40 40 60
Females 60 40 40 60 Education
0 to 14 years old 51 49 49 51 At least one school-aged child is not enrolled in school 28.8
15 to 64 years old 66 34 34 66 No adult has completed primary education 21.1
65 and older 67 33 33 67
Without education (16+) 52 48 48 52 Access to basic infrastructure
Primary education (16+) 66 34 34 66 No access to limited-standard drinking water 6.5
Secondary education (16+) 77 23 23 77 No access to limited-standard sanitation 24.8
Tertiary/post-secondary education (16+) 91 9 9 91 No access to electricity 9.3

Source: World Bank using HIES/SARMD/GMD Source: World Bank using HIES/SARMD/GMD
Notes: N/A missing value, N/A* value removed due to less than 30 observations

POVERTY DATA AND METHODOLOGY

The official national poverty rates are produced by the Planning Commission using the Household Income and Expenditure Survey (HIES), which has been collected by the Pakistan
Bureau of Statistics (PBS) every alternate year, with some breaks, since 1963. The survey underwent major changes in the questionnaire and sample design during the '90s. There are
nine waves of comparable HIES survey rounds currently available over the 2001–2018 period. In 2015-16, a comparable Household Integrated Income and Consumption Survey (HIICS)
was conducted in lieu of the HIES. Survey microdata is publicly available for download on PBS's website.

The welfare metric used to estimate poverty is consumption per adult equivalent. The food poverty line reflects the cost of consuming 2,350 calories per adult equivalent per day, and a
total poverty line is estimated to reflect the expenditure necessary to satisfy non-food needs. The cost of basic needs (CBN) poverty line estimated using the HIES 2013-14 was Rs. 3,030
per adult equivalent per month in current prices (Rs. 3,741 and Rs. 3,769 expressed in 2018-19 urban and rural prices, respectively). This yielded a national headcount rate in 2018-19 of
21.9 percent, and corresponding urban and rural rates of 10.9 percent and 28.2 percent, respectively. The international poverty rates use consumption per capita, temporally and
spatially deflated, and the new international poverty lines. Welfare projections beyond 2018 are based on microsimulations, which rely on HIES 2018-19 microdata and additional
macroeconomic data, including sectoral and GDP growth and inflation rates.

Note on new global poverty lines: Poverty data are now expressed in 2017 Purchasing Power Parity (PPP) prices, versus 2011 PPP in previous editions. As price levels across the world
evolve, global poverty lines have to be periodically updated to reflect the increase of the value of the lines in nominal terms. The new global poverty lines of $2.15, $3.65, and $6.85
reflect the typical national poverty lines of low-income, lower-middle-income, and upper-middle-income countries in 2017 prices. In addition to reflecting updates in nominal terms,
upper-middle-income countries raised the standards by which they determine people to be poor from 2011 to 2017. Hence, the increase in the upper line is larger, and the population
that does not meet the new standard is higher in most countries than it was with 2011 PPPs. See pip.worldbank.org.

HARMONIZATION
The numbers in this report are based on SARMD. The South Asia Micro Database (SARMD) is a regional database of socio-economic indicators established in 2014 managed by SARTSD. It
includes 40 surveys covering 8 countries. It follows the Global Monitoring Database (GMD) Harmonization guidelines, including the construction of the welfare aggregate which is used
for the Global Poverty Monitoring. Terms of use of the data adhere to agreements with the original data producers.

South Asia povertydata.worldbank.org

Pakistan www.worldbank.org/poverty