ISLAMABAD:
The World Bank said on Tuesday that nearly half of the Middle East and North African region’s poor people earning less than $3 a day live in Pakistan and poverty in the country increased due to prolonged economic adjustment that weakened real household incomes and employment opportunities.
In its Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region report, the Washington-based lender also said that population-growth adjusted real GDP growth in Pakistan would remain at 2.2% in this fiscal year, which is almost at the last year’s level.
Overall, the World Bank has projected 3.8% economic growth rate and 8.2% inflation rate in Pakistan during the current fiscal year 2026-27.
The World Bank had separated Pakistan from the South Asia region and clubbed it with the Middle East and North Africa region.
“Pakistan accounts for about 48% of the people in the region living below the $3 per day (about Rs840 daily income) poverty line”, according to the report that the lender released on Tuesday evening.
The report stated that the remaining poor people were concentrated in Afghanistan, Syria, and Yemen the three war-affected countries, which together accounted for another 47% of people living below the poverty line of $3 per day income.
The report further stated that most recent estimates showed poverty rates at the $3 per day line approached or exceeded 20% in Djibouti, Pakistan, Syria, and Yemen.
The latest World Bank Group estimates showed that MENAAP accounts for 14% of the world’s extreme poor, second only to Sub-Saharan Africa. After declining substantially during the 2000s and 2010s, poverty reduction stalled around 2019 and reversed following the COVID-19 pandemic.
The regional increase in poverty was “driven primarily by a rise in poverty in Pakistan, where the poverty rate rose by 6.4 percentage points at the $3 per day line and 3.2 percentage points at the $4.2 per day line between 2018-19 and 2024-25 following a succession of adverse shocks, including 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 weakened real household incomes and employment opportunities,” according to report.
There has been criticism over the prolonged period of economic adjustments under the IMF programmes that improved the fiscal and monetary numbers but contributed to low economic growth with high poverty and high unemployment.
The report showed that compared to 2.1% last year, the real GDP per capita growth could be 2.2% in this fiscal year. It has also projected a current account deficit of 0.8% of the GDP and the budget deficit of 3.5% -the two key indicators that are higher than the previous fiscal but remain within the manageable limits.
The World Bank said that the governments in the region face simultaneous demands to cushion households from higher prices and respond to conflict-related humanitarian needs. Pakistan has introduced targeted fuel and farm assistance, it added.
The World Bank said that the petrol price increases were 40% or higher in Lebanon, Pakistan, the Syrian Arab Republic, and the United Arab Emirates. Diesel prices rose, on average, by more than 80% in Lebanon and nearly 70% in the United Arab Emirates and have exceeded 40% in Pakistan and the West Bank and Gaza since the start of the Middle East conflict.
Oil-importing countriesDjibouti, Egypt, Jordan, Morocco, Pakistan, and Tunisiaremain exposed through economic channels, including rising inflationary pressures from higher oil and other commodity prices, loss of fiscal space, a decline in remittances from the Gulf economies, and increased costs of borrowing, mainly because of higher insurance risk as the conflict persists.
Pakistan lags in innovation
Pakistan’s private sector has also not yet adapted to emerging needs of the economy. The World Bank report stated that the share of firms that introduced a new product or service in the past three yearsa measure of product innovationis significantly lower in MENAAP than in peer economies.
In Egypt, just 9% of firms report product innovation and 3% process innovation; in Pakistan, just 3% of firms reported product innovation and 1% process innovation against a lower-middle-income peer average of 23% for product and 14% for process.
Artificial Intelligence use
The report noted that AI use is more concentrated in a small number of occupations in the rest of the MENAAP economies. Pakistan records the highest absolute conversation count in MENAAP, but usage is concentrated in arts and media (including graphic design, content creation, and translation rather than software, potentially reflecting the country’s large presence on international freelance platforms on which these services are in demand.
Across MENAAP since the introduction of ChatGPT, demand for AI remains concentrated in occupations within the technical core. Across the region, the share of job postings requiring any digital skills increased substantially between 2021 and 2025 in almost all countries, with double-digit percentage point gains in Bahrain, Lebanon, Pakistan, and Saudi Arabia
Across MENAAP, Internet use is often above what income levels would predict, but uneven broadband penetration and gaps in electricity access still limit the physical foundations for AI adoption.
Eight MENAAP countriesDjibouti, Egypt, Iraq, Jordan, Oman, Pakistan, Syria, and Yemenfall below the benchmark line, indicating lower mobile broadband subscriptions than income peers, according to the report.
