Poverty increases in Pakistan during the last financial year: report

KARACHI (Online) Poverty in Pakistan is estimated to have increased during the last fiscal year due to record high food and energy prices, weak labor markets and damage caused by floods.

According to the report, the Macro Poverty Outlook prepared for the recently concluded annual meetings of the World Bank and the IMF in Morocco indicated that without significant positive growth rates in food and energy. High prices can cause social decay.

It may particularly affect the well-being of already disadvantaged households, whose savings are already depleting and incomes are falling.

The report stated that high inflation coupled with worsening wage and employment situation has severely affected purchasing power, due to which poverty is estimated to increase. Inflation rate is expected to be 26.5 percent during fiscal year 2024, which is likely to be 17 percent in FY 2025 after a reduction.

The report noted that higher petroleum levies and energy tariff adjustments would maintain domestic energy price pressures, and increase social and economic insecurity.

Despite the signing of a $3 billion short-term loan agreement with the IMF this year, foreign exchange reserves are expected to remain less than one month’s worth of imports during the next fiscal year, necessitating continued controls on imports and Economic recovery will be difficult.

Real gross national product (GDP) growth rate is expected to be 1.7 percent during fiscal year 2024.

Along with this, confidence may also weaken due to tight fiscal and monetary policy, inflation and uncertainty regarding upcoming elections.

Poverty is expected to decrease to 37.2 percent during the fiscal year 2024 with a recovery in the growth rate, the report said.

The current account deficit is expected to widen to 1.5 percent of GDP in FY 2025.

The report further noted that overall economic slowdown, inflation and flood-related disasters have disproportionately affected poorer households, leading to increased inequality.

The Gini index is estimated to increase by 1.5 points to reach 30.7 in FY 2023.

In addition, last year’s floods caused extensive damage to infrastructure, including schools and clinics, along with poor economic strategies such as removing children from schools, which will likely have negative impacts on human development.