Faster reforms could triple Pakistan’s incomes by 2050, says World Bank

Faster reforms could triple Pakistan’s incomes by 2050, says World Bank

ISLAMABAD: Pakistan’s incomes could triple by 2050 if the country ensures faster implementation of structural reforms, according to the World Bank Group’s latest Pakistan Development Update, titled Attaining Escape Velocity. The report says that following progress on macroeconomic stabilisation, Pakistan has an opportunity to achieve faster and sustained economic growth and create more jobs. Sound macroeconomic policies in recent years have helped stabilise the economy and preserve growth despite the impact of the Middle East conflict. Real gross domestic product (GDP) growth increased to 3.7 per cent in FY26 from 3.2pc in FY25. Revenue growth and expenditure restraint supported record primary fiscal surpluses, which reached 2.9pc of GDP in FY26, while strong remittances enabled the country to rebuild its foreign exchange reserves. These improvements were recognised through upgrades by two major international rating agencies, S&P and Moody’s, and enabled Pakistan to return to international debt markets with the issuance of a $3 billion Eurobond. “Pakistan has made real progress in restoring stability, and markets have taken notice,” World Bank Country Dir­ector Bolormaa Amgaa­baz­­ar said. “But real per capita growth — the rate at which the income of the average Pakistani increases — remains stuck at around 1.6pc. Reforms to drive faster growth are now urgently needed,” she added. The report finds that higher growth is possible if Pakistan follows the path taken by other successful countries in pursuing ambitious economic reforms. Upgrading policies and institutions to the standards of the average middle-income country could drive sustained annual growth of 6.2pc to 6.9pc, allowing Pakistan to reach Vietnam’s current income level 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. “Achieving this kind of private-sector-led growth requires a plan, coordination, and committed reform implementation,” he added. The report outlines an ambitious set of reforms that could enable Pakistan to attain by 2050 the per capita income levels of countries currently at the upper-middle-income threshold. Many of the proposed measures build on reforms already underway. These include timely adjustments to power-sector tariffs, which helped reduce energy subsidies from 1.1pc of GDP in FY25 to 0.8pc in FY26, continued trade liberalisation under the National Tariff Policy and the recent privatisation of Pakistan International Airlines (PIA). Building on these measures, sustained progress will depend on further reforms to improve the business environment, overhaul the tax system, reduce the state’s presence in the economy and expand access to finance.