Poverty and inequality

Pakistan is facing a clearer picture of deepening poverty and economic distress, according to newly released data from the Household Integrated Economic Survey and Pakistan Social and Living Standards Measurement. This information arrives after a nearly six-year hiatus, a period that saw the nation grapple with substantial economic shocks.

In 2018-19, Pakistan underwent a difficult macroeconomic adjustment to address a significant current account deficit. The global economy's contraction due to the COVID-19 pandemic between 2020 and 2021 led to expansionary policies worldwide. These measures, intended to mitigate the pandemic's impact, subsequently fueled global inflation and monetary tightening. This global environment dried up dollar liquidity and drove up commodity prices.

During this cycle, Pakistan's government pursued growth through increased domestic consumption. This strategy, however, reintroduced another balance-of-payments crisis. The situation was further complicated by rising commodity prices and inflation, creating a challenging economic landscape for the country.