Pakistan's poverty rate has surged sharply in recent years, exposing deep structural weaknesses in the economy and intensifying calls for a decisive shift toward export-led growth as the only viable path to recovery.
Speaking at the launch of the 'Poverty and Inequality Estimates 2024-25', Planning Minister Ahsan Iqbal warned that poverty has risen from 21.9 percent to 28.9 percent between 2018-19 and 2024-25, driven by global shocks and domestic policy choices. The increase, he noted, reflects the combined impact of the COVID-19-era food inflation cycle, environmental disasters such as floods, and commodity price surges.
The minister argued that macroeconomic expansion anchored in exports and performance-based industrialisation is now essential to reverse this trend. Without such a transformation, he suggested, sustainable poverty reduction would remain elusive.
At the core of this strategy lies the development of competitive human capital. Investment in education, skills and technological awareness, he said, is critical for generating employment and improving productivity across provinces and districts. The emphasis on local capacity-building reflects a growing recognition that national progress depends heavily on grassroots economic activity.
Small and Medium Enterprises (SMEs) and cottage industries are expected to play a central role. By promoting these sectors at the district level, policymakers aim to unlock local potential and address deprivation where it is most acute. Such decentralised industrialisation is also seen as a means to advance progress toward the Sustainable Development Goals.
The deterioration in living standards has been uneven but widespread. Urban poverty climbed to 28.9 percent over the past seven years, while rural poverty rose more steeply, reaching 36.2 percent. These figures highlight the depth of economic strain and the urgency of corrective measures.
Iqbal linked part of the current predicament to earlier policy missteps, including excessive reliance on imports and consumption-driven growth. Imports, he noted, surged to $80 billion, contributing to a trade deficit of $50 billion. Combined with political instability, this trajectory compelled the country to enter multiple programmes with the International Monetary Fund.
Reforms under these arrangements, particularly subsidy reductions, have also contributed to rising hardship, underscoring the social cost of stabilisation efforts. The challenge now, he implied, is to balance fiscal discipline with inclusive growth.
Public investment has weakened during this period. Allocations under the Public Sector Development Programme (PSDP) have declined from 2.8 percent to 0.9 percent of the budget, limiting the state's ability to support development and poverty alleviation. With provinces now controlling a larger share of resources, the minister called for stronger regional strategies to tackle inequality.
Disparities within provinces remain a critical concern. Unequal distribution of resources across districts, he warned, not only entrenches poverty but can also fuel instability. Areas marked by deprivation are more vulnerable to unrest, making equitable development a matter of both economic and social importance.
The government's stated objective of achieving 'Zero Poverty' hinges on targeted interventions in underdeveloped regions. Establishing small industrial units, expanding employment opportunities and improving access to resources are expected to form the backbone of this approach.
Ultimately, the policy direction points to a broader economic reorientation. Export-led growth, supported by human capital development and decentralised industry, is being positioned as the principal mechanism to restore stability and reduce inequality.
Whether this strategy can deliver tangible results will depend on its execution. For now, the data presents a stark reality: without structural change, rising poverty risks becoming a defining feature of Pakistan's economic landscape.