Pakistan Economic Crisis: Soaring Poverty And Declining Incomes

As of February 2026, Pakistan's economy is facing severe challenges, with a soaring poverty rate of 29% affecting nearly 70 million people. The Planning Ministry's report indicates a 12% decline in real household incomes and a Gini coefficient of 32.7, marking the highest income inequality in 27 years. Rural poverty has surged to 36.2%, while urban poverty stands at 17.4%. Recent developments suggest that the economic situation could deteriorate further due to potential geopolitical tensions, particularly a possible US-Iran conflict, which could push oil prices above $90 per barrel, increasing Pakistan's import bill by $5 billion annually and pushing inflation rates beyond 12-15%. This situation is compounded by the banking sector's heavy reliance on tax revenues, which poses significant fiscal risks.