The World Bank has released updated projections for Pakistan's economic growth and poverty rates for the coming fiscal years. The estimates reflect new data and recent events, including major flooding that affected agricultural output.
During 2025, the World Bank published three separate forecasts for Pakistan's GDP growth in fiscal year 2026 (FY26). This variation was due to differences in publication timing and the availability of new information. In April 2025, the Pakistan Development Update projected a GDP growth rate of 3.1 percent for FY26. However, reports released on October 7, 2025—the Macro Poverty Outlook (MPO) and the Middle East, North Africa, Afghanistan & Pakistan Economic Outlook—estimated a lower rate of 2.6 percent, based on early assessments of flood damage to agriculture.
The World Bank explained: “Estimates in the October Pakistan Development Update reflected new information about the impacts of recent flooding.” Initial data indicated significant effects on agriculture, especially in Punjab province, leading to more conservative growth forecasts in earlier reports. These were described as a “flood scenario” with considerable uncertainty regarding total damages.
After these initial projections were finalized, additional data from the government and the UN Food and Agriculture Organization indicated that flood impacts were less severe than first estimated. With this updated information available before its later publication date, the October 28, 2025 edition of the Pakistan Development Update revised FY26 GDP growth upwards to 3.0 percent.
Regarding poverty rates, the World Bank’s latest report projects that national poverty will decline modestly to 22.2 percent in FY25 from an estimated 25.3 percent in FY24. According to the report: “Due to strong growth that took place between FY24 and FY25 in the construction and logistics sectors, which together employ about one quarter of the poor, some segments of the poor were able to benefit from higher labor incomes.” A reduction in food inflation during FY25 also contributed by increasing purchasing power among poorer households.
Despite these improvements for certain groups such as workers in construction and logistics—where jobs are often informal—other groups like rural populations have not seen comparable gains because agricultural sector growth remained weak. The World Bank emphasized: “This is why it is important to focus on broader, long-term trends—such as those outlined in the Pakistan Poverty, Equity, and Resilience Assessment—rather than year-on-year fluctuations.”
The methodology used by the World Bank updates poverty estimates whenever GDP projections change since there are large gaps between official household surveys conducted by Pakistan’s government; microsimulation models fill these gaps using current economic indicators.
Long-term analysis shows that while Pakistan reduced poverty significantly during the early 2000s, progress stalled after 2015 and reversed starting in 2020 following shocks such as COVID-19, severe floods in 2022, and high inflation rates. Human capital development remains slow with nearly forty percent of children experiencing stunting—a sign of malnutrition—and persistent disparities exist between urban and rural areas.
Past reductions in poverty were largely driven by non-agricultural labor income as families moved from farming into low-skill service jobs; however recent structural transformation has slowed down job creation and income diversification across sectors.
The forthcoming Household Integrated Economic Survey (HIES) covering period 2024/25 is expected to provide updated figures on consumption patterns and welfare indicators beyond those available from previous surveys conducted up through 2018/19.
Explaining different benchmarks used for measuring poverty domestically versus internationally: “National and international poverty lines serve different purposes and are calculated using fundamentally different methodologies.” While Pakistan’s national line reflects local conditions for policy-making purposes within country borders, international thresholds like $4.20/day allow comparisons across nations but set a higher bar so more people fall below it globally.