Key points
- For Pakistan new poverty line has been raised from $3.65 to $4.20 per person per day
- Poverty rate in Pakistan has increased from 39.8pc to 44.7pc
- Extreme poverty in Pakistan has surged from 4.9pc to 16.5pc
ISLAMABAD: The World Bank has revised upward the income thresholds used to assess global poverty, resulting in a rise in the percentage of Pakistanis classified as poor to 44.7 per cent. However, this figure may still not fully capture the harsh realities on the ground, as it is based on survey data that is seven years old.
On Thursday, the Washington-based financial institution released updated international poverty lines to account for changes in the cost of goods and services and their impact on populations worldwide, according to the Express Tribune.
For Pakistan, a lower middle-income country, the new poverty line has been raised from $3.65 to $4.20 per person per day, according to Christina Wieser, Senior Poverty Economist at the World Bank, during a media briefing.
As a result of this adjustment, the poverty rate in Pakistan has increased from 39.8 per cent to 44.7 per cent under the new $4.20 daily threshold.
Revising extreme poverty
The World Bank has also revised the extreme poverty line, increasing it from $2.15 to $3 per person per day. Consequently, the proportion of Pakistan’s population living in extreme poverty has surged from 4.9 per cent to 16.5 per cent.
Wieser explained that a major reason for the sharp increase is that a large portion of the population falls within the $2.15 to $3 daily income range, which significantly raised the number of individuals now considered extremely poor.
The World Bank noted that around 82 per cent of the rise in extreme poverty is due to the higher value of the updated international poverty line, which reflects rising national poverty thresholds in comparable countries. The remaining increase is attributed to price inflation in Pakistan between 2017 and 2021.
The bank has not utilised Pakistan’s most recent population census and instead used data from the United Nations.
International poverty lines
Furthermore, Wieser confirmed that the estimates are based on the Household Income and Expenditure Survey (HIES) 2018–19. She emphasised that while international poverty lines are useful for monitoring global trends and comparisons, national poverty lines are more appropriate for shaping country-specific policy decisions.
She acknowledged that the effects of more recent events—such as the Covid-19 pandemic and the catastrophic floods of 2022—are not reflected in the current analysis, as the baseline remains unchanged. “We are eagerly awaiting new data from the forthcoming Household Integrated Economic Survey to update our baseline,” she added.
Increase in poverty
Local economists have previously estimated a sharp increase in poverty levels following the 2022 floods, which submerged nearly a quarter of the country and severely affected communities in three provinces.
According to the World Bank, these revisions to international poverty thresholds are part of ongoing efforts to ensure poverty statistics remain accurate and comparable across nations. The update follows a consistent methodology used in previous revisions, continuing a practice that began with the introduction of the original dollar-a-day line in 1990.
