ISLAMABAD: The World Bank on Wednesday said Pakistan’s slow and uneven structural transformation has hindered diversification, job creation, and inclusive growth, leading to low productivity and constrained income growth across all sectors.

Responding to criticism over frequently changing economic and poverty estimates, the Washington-based lender attributed recent revisions to “scheduling reasons”.

In a statement, the World Bank projected Pakistan’s GDP growth at three per cent for FY2025, alongside a “modest decline in poverty,” noting that such growth would be insufficient to significantly raise living standards or reduce entrenched inequalities. “A much faster rate of economic growth will be required to sustainably improve living standards and change the country’s poverty trajectory,” said Tobias Haque, WB’s lead economist in Pakistan.

The Bank said its GDP and poverty estimates were based on simulation models due to limited data availability, urging authorities to conduct regular household surveys to enhance accuracy. Mode­led estimates, it said, provide useful direction but lack the precision of survey-based figures.

It estimated poverty to decline from 25.3pc in FY2024 to 22.2pc in FY2025, driven by growth in construction and logistics — sectors employing about a quarter of the poor — and easing food inflation, which improved purchasing power. However, it warned that high informality in these sectors leaves low-skilled workers vulnerable to shocks, while rural poverty persists due to weak agricultural growth.

Addressing discrepancies in growth forecasts, the Bank clarified that differences among its reports — the Pakistan Development Update, Macro-Poverty Outl­ook, and Regional Econ­omic Update — stemmed from publication timing. Initial “flood scenario” projections of 2.6pc GDP growth for FY2026 were later revised to 3pc after new government and UN data indicated smaller-than-expected damage to agriculture.

Published in Dawn, October 30th, 2025