- World Bank’s new poverty line adds 125 million people to extreme poverty worldwide
- Pakistan faces rising poverty, inequality, climate shocks, and economic stagnation under flawed policies
Statistics showed that the World Bank in June 2025, increased its extreme poverty estimates by 125 million people. This doesn’t mean the world has gotten poorer: it reflects a new, higher International Poverty Line of $3 a day, up from $2.15. To track progress towards ending extreme poverty by 2030, the United Nations relies on the World Bank to estimate the share of people living below a certain threshold, called the International Poverty Line (IPL). In June 2025, the World Bank proclaimed a major change to this line, raising it significantly, from $2.15 to $3 per day. This rise partly reflects inflation — a consequence of the World Bank using international dollars at 2021 prices, updated from 2017 prices. However, the IPL has also increased substantially, even after inflation adjustments. The poverty line has increased in real terms. And with it, so have the World Bank’s estimates of extreme poverty. 125 million people who would not have been counted as extremely poor before June are now included. This present rise in the IPL is because of an aspect of the World Bank’s approach that some users of the data may not be aware of.
Globally, the population is expected to continue growing for the next 50 to 60 years, peaking at approximately 10.3 billion by the mid-2080s before gradually declining to around 10.2 billion by the end of the century.
According to the World Bank’s new poverty estimates, 44.7 percent of Pakistan’s population now lives in poverty. The proportion of people living in extreme poverty has risen from 4.9 percent to 16.5 percent. This revision, based on revised threshold, does not take into account the fallouts from the Covid-19 pandemic, the 2022 floods, and recent years’ phenomenal spike in cost of living, that may have pushed more people into poverty. Meanwhile, per capita income has increased to $1,824 in FY2025. But this rise conceals worsening income disparity in our country. These aren’t just statistics; they are a reflection of policy choices and an indictment of the country’s economic direction. It shows that our economic model is broken, necessitating a complete rethink of our economic strategy to fighting poverty.
Successive governments have poured billions into subsidies and relief programs such as the Benazir Income Support Program (BISP), while neglecting growth, job creation, human development, and rural development. Poverty in Pakistan is not simply rising; it is being manufactured and maintained through decisions that entrench inequality and suppress opportunity. In FY2026, BISP allocation has been increased by 20 percent to Rs 722bn to expand coverage to 10m families. The quarterly stipend will increase from Rs13,500 to Rs14,500. While the government is striving to expand beneficiary coverage and improve transparency in fund distribution, the overall poverty reduction strategy needs a serious rethink, given limited fiscal space and the low-growth, low-investment trap.
The FY26 budget was directed at the IMF, business elites and government employees. There was no vision, strategy, or action plan to address economic stagnation, unemployment, poverty, inequality, or the country’s dismal state of human development.
Poverty in Pakistan is not just accidental. It is a consequence of deliberate policy choices, neglect and systemic flaws. For example, our farmers incurred Rs2.2 trillion losses in wheat production alone this year, jeopardising food security and reducing rural incomes. Agriculture, which accounts for 23 percent of GDP, employs 37 percent of the labour force, and contributes 60 percent to export earnings, has been hit hard by climate shocks, plummeting prices, policy missteps and state neglect. Crop production fell by 13.5 percent in FY25: cotton by 30.7 percent, maize by 14.7 percent, and wheat by 8.9 percent.
Likewise, our tax system perpetuates inequality. Salaried individuals contributed around Rs555bn in FY2025, 51 percent more than last year. Despite receiving billions in development assistance annually over decades — $53.5bn in 2022 alone — African countries are home to three-quarters of the world’s poor. Sub-Saharan Africa still has the highest number of people living in extreme poverty: 411m in 2023, 45 percent up from 1990. Foreign aid has failed to eradicate poverty, highlighting the limitations of externally funded relief without structural reforms. Instead, Africa is drowning in debt.
Furthermore, according to the Seventh Population and Housing Census (2023), Pakistan’s population has reached 241.5 million, comprising 124.32 million males and 117.15 million females. A defining demographic characteristic of Pakistan is its substantial youth bulge: 26 percent are aged between 15 and 29 years, and 53.8 percent of the population falls within the working-age group (15 to 59 years). This demographic dividend offers a unique opportunity for economic prosperity and social uplift if effectively converted into an asset equipped with scientific knowledge and technology that will offer a powerful engine for innovation and sustainable growth.
In last I would like to mention here, our country that has seen the most dramatic improvements in poverty reduction and other initiatives of human well-being have all focused on growth, economic reforms and targeted social protection strategies. Pakistan must learn from these lessons. This will require sincere political will, a strong policy focus and coordination amongst the different tiers of government. Furthermore, sustained investment in education, skill development, and labor market reforms is critical to equipping the youth with the capabilities needed to succeed in an increasingly dynamic, innovation-driven, and digital global economy.