Nearly half of all people living below the $3-per-day poverty line in the Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region reside in Pakistan, according to a World Bank report cited by The Express Tribune. The findings place Pakistan at the centre of a worsening regional poverty crisis, driven by a cascade of economic shocks over the past six years.

Pakistan's share of regional poverty

Pakistan accounts for approximately 48 per cent of the MENAAP region's population living below the $3 per day threshold — equivalent to roughly ₹840 in daily income. The remaining poor are concentrated in Afghanistan, Syria, and Yemen, three conflict-affected nations that together account for another 47 per cent of the regional poor.

Poverty rates at the $3-per-day line approached or exceeded 20 per cent in Djibouti, Pakistan, Syria, and Yemen. Notably, the World Bank has formally separated Pakistan from the South Asia grouping and reclassified it within the MENAAP region — a shift that underscores the country's deepening economic alignment with its western neighbours.

What drove the surge in Pakistani poverty

The poverty rate in Pakistan rose by 6.4 per cent at the $3-per-day line and 3.2 per cent at the $4.2-per-day line between 2018-19 and 2024-25, according to the report. The increase was driven by a succession of adverse shocks: the COVID-19 pandemic, the devastating 2022 floods, a macroeconomic crisis marked by high inflation and currency depreciation, and a prolonged period of economic adjustment that eroded real household incomes and employment.

The MENAAP region as a whole accounts for 14 per cent of the world's extreme poor — second only to Sub-Saharan Africa. After sustained declines during the 2000s and 2010s, poverty reduction in the region stalled around 2019 and reversed following the COVID-19 shock, with Pakistan's deterioration identified as the primary regional driver.

Economic outlook and fiscal pressures

The report projects 3.8 per cent economic growth and 8.2 per cent inflation for Pakistan in the current fiscal year 2026-27. However, population-growth-adjusted real GDP growth is estimated at just 2.2 per cent — barely above last year's 2.1 per cent — indicating that per-capita gains remain negligible.

The current account deficit is pegged at 0.8 per cent of GDP and the budget deficit at 3.5 per cent — higher than the previous fiscal but described as within manageable limits. Oil-importing countries in the region, including Pakistan, remain exposed to rising inflation, shrinking fiscal space, declining remittances from the Gulf, and higher borrowing costs linked to the ongoing Middle East conflict. Petrol and diesel prices in Pakistan have risen by more than 40 per cent since the start of the conflict, compounding household-level distress.

Innovation gap and digital divide

The report also flags Pakistan's weak innovation record: just 3 per cent of firms reported product innovation and 1 per cent process innovation — far below the lower-middle-income country average of 23 per cent and 14 per cent respectively. While Pakistan recorded the highest absolute uptake of artificial intelligence in the MENAAP region, its use remains concentrated in arts and media — such as graphic design and content creation — rather than in productivity-enhancing industrial or services applications.

Eight MENAAP countries, including Pakistan, fall below the benchmark for mobile broadband subscriptions relative to income peers, pointing to a structural digital divide that could further constrain economic mobility. The report's findings suggest that without addressing structural vulnerabilities — energy costs, fiscal constraints, and low innovation — Pakistan's poverty trajectory is unlikely to reverse meaningfully in the near term.