The World Bank estimates that 10 million Pakistanis are in danger of becoming impoverished.

Photo-Telegraph India

The World Bank's recent biannual report on Pakistan's economy presents a somber outlook, revealing that over 10 million more people are at risk of falling into poverty in the country. This grim forecast stems from a combination of factors, including sluggish economic growth at 1.8 percent and soaring inflation reaching a staggering 26 percent in the current fiscal year.

According to the report, Pakistan is expected to miss several major macroeconomic targets outlined by international financial institutions. Despite efforts to stimulate economic recovery, poverty alleviation endeavors remain insufficient, with the poverty rate projected to persist around 40 percent. Currently, approximately 98 million Pakistanis are grappling with poverty, and the report highlights the vulnerability of those hovering just above the poverty line, with 10 million individuals at risk of slipping into poverty.

The report attributes the challenges to a variety of factors, including limited wage growth in key sectors that employ many of the poor, such as construction, trade, and transportation. It notes that while the windfall gain in agricultural output may have benefited some, it was offset by continued high inflation and limited wage growth in other sectors.

Furthermore, the report warns of potential consequences such as an increase in out-of-school children and delayed medical treatments, particularly for worse-off families, due to the persisting cost-of-living crisis and rising transportation costs. Food security also remains a concern in several rural districts across the country, particularly those impacted by natural disasters like the 2022 floods.

The World Bank underscores the importance of addressing these challenges to prevent a stall in poverty reduction efforts in the medium term. It warns that chronic inflation, coupled with policy uncertainty, could lead to social discontent and negative welfare impacts. Despite some signs of economic recovery, Pakistan's economy remains under stress, with low foreign reserves, high inflation, and subdued economic activity.

Looking ahead, the World Bank projects continued economic challenges for Pakistan, with growth remaining below potential and heightened social vulnerability. It emphasizes the need for fiscal consolidation measures and addressing financial sector risks to mitigate the risks to the economic outlook. Additionally, the report highlights the importance of policy reforms to stimulate economic growth and reduce poverty in the country.

Overall, the World Bank's report paints a bleak economic picture for Pakistan, underscoring the urgent need for comprehensive measures to address the underlying challenges and ensure sustainable economic development and poverty reduction.

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