The World Bank has issued a stark warning that around 10 million Pakistanis may face acute food insecurity in the current fiscal year, citing worsening poverty levels, sluggish economic growth, and the impact of climate change on agriculture.
In its latest Pakistan Development Update, the Bank revised Pakistan’s economic growth forecast downward to 2.7%, reflecting tight fiscal and monetary policies that have curbed economic activity. The government is also expected to miss its budget deficit target, while the country’s public debt continues to rise both in volume and as a percentage of GDP.
The report highlights that climate-related disruptions to major crops like rice and maize will push rural communities further into food insecurity. It noted that poverty is projected to increase, with 1.9 million more people likely to fall below the poverty line. Real wages for low-skilled workers have stagnated despite rising nominal earnings, and labour force participation, particularly among youth and women, remains alarmingly low.
Currently, 37% of youth and 62% of women are not engaged in employment, education, or training. At the same time, social protection expenditures have not kept up with inflation, restricting access to essential services such as food, health, and education.
The World Bank estimates a poverty headcount of 25.4% using the national poverty line adjusted to Rs8,231 per adult equivalent per month.
The report projects modest economic growth of 3.1% next year and 3.4% by 2027. Inflation is expected to fall to 5%, driven by reduced commodity prices and a stable exchange rate. For the first time in 15 years, the current account is expected to post a surplus of 0.2% of GDP, though a return to deficit is likely next year.
Fiscal challenges remain significant, with the budget deficit expected to reach 6.8% of GDP—well above the target of 5.9%. Public debt is forecast to rise to 74.6% of GDP. The Bank stressed the need for structural reforms including tax system efficiency, public sector downsizing, pension system overhaul, and improved property tax valuation.
Reforms in agriculture income tax, reduction of preferential tax treatments, and the imposition of sunset clauses for exemptions were also recommended to ensure sustainable recovery and investor confidence.
