Faster reforms could triple Pakistan’s incomes by 2050: World Bank
Pakistan could triple its incomes by 2050 through faster structural reforms that boost private investment and sustain economic growth, the World Bank Group said on Thursday, urging the country to build on progress in macroeconomic stabilisation.
In its latest Pakistan Development Update, titled Attaining Escape Velocity, the global lender said Pakistan had an opportunity to accelerate growth and job creation through ambitious reforms, following improvements in economic stability.
Sound macroeconomic policies had helped stabilise the economy and preserve growth despite the impact of the Middle East conflict, the report said.
Real gross domestic product (GDP) growth rose to 3.7% in fiscal year 2025-26, from 3.2% in the previous fiscal year.
Revenue growth and spending restraint helped Pakistan achieve a record primary fiscal surplus of 2.9% of GDP in FY26, while strong remittances supported the rebuilding of foreign exchange reserves, it added.
The improvements were reflected in rating upgrades by S&P and Moody’s and Pakistan’s return to international debt markets through the issuance of a $3 billion Eurobond, according to the World Bank.
“Pakistan has made real progress in restoring stability, and markets have taken notice,” said Bolormaa Amgaabazar, the World Bank’s country director for Pakistan.
However, real per capita growth — the rate at which the income of the average Pakistani increases — remained around 1.6%, she said, adding that reforms to accelerate growth were urgently needed.
The report said Pakistan could achieve sustained annual growth of 6.2% to 6.9% by upgrading its policies and institutions to the standards of the average middle-income country.
Such growth could bring Pakistan’s income levels to those currently seen in Vietnam by 2050.
“With macro stabilisation achieved but fiscal resources and foreign exchange still tightly constrained, structural reform to encourage private investment is the necessary next step towards higher living standards,” said Sebastian Essl, the report’s lead author.
He said private-sector-led growth would require a clear plan, coordination and sustained implementation of reforms.
The report identified measures to improve the business environment, reform the tax system, reduce the state’s role in the economy and expand access to finance as key to achieving higher incomes.
It said several reforms were already under way, including timely power tariff adjustments, implementation of trade liberalisation under the National Tariff Policy and the privatisation of Pakistan International Airlines.
Power sector tariff adjustments helped reduce energy subsidies from 1.1% of GDP in FY25 to 0.8% in FY26, the report said.
The World Bank said sustained progress on these measures and further structural reforms could help Pakistan reach by 2050 the per capita income levels of countries currently classified as upper-middle-income economies.