ISLAMABAD: Pakistan’s incomes could triple by 2050 if the country accelerates structural reforms to boost private investment, improve the business environment and sustain economic growth, according to the World Bank Group’s latest Pakistan Development Update, titled Attaining Escape Velocity.
The report says Pakistan has an opportunity to achieve faster and sustained economic growth and create more jobs following progress in macroeconomic stabilization. However, it stresses that ambitious and consistent structural reforms are essential to translate economic stability into higher incomes and improved living standards.
Pakistan’s real GDP growth increased to 3.7% in fiscal year 2025-26 (FY26), compared with 3.2% in FY25. The report attributes the progress to sound macroeconomic policies, which helped stabilize the economy despite the effects of the Middle East conflict.
Revenue growth and spending restraint also supported a record primary fiscal surplus of 2.9% of GDP in FY26. Meanwhile, strong remittances enabled Pakistan to rebuild its foreign exchange reserves.
The economic improvements were recognized through credit rating upgrades by S&P and Moody’s, while Pakistan returned to international debt markets with the issuance of a $3 billion Eurobond.
Pakistan’s Incomes Could Triple by 2050 Through Ambitious Reforms
According to the World Bank, Pakistan could achieve sustained annual economic growth of 6.2% to 6.9% by upgrading its policies and institutions to levels comparable with those of the average middle-income country.
Such growth could enable Pakistan to reach Vietnam’s current income level by 2050, the report states. It also highlights the potential for the country to attain per capita income levels associated with countries currently at the upper-middle-income threshold through ambitious economic reforms.
Bolormaa Amgaabazar, World Bank Country Director for Pakistan, said the country had made meaningful progress in restoring economic stability, which had been recognized by financial markets.
However, she noted that real per capita growth—the rate at which the income of the average Pakistani increases—remains around 1.6%, highlighting the urgent need for reforms to accelerate economic growth.
Private Investment Key to Sustained Economic Growth
The report identifies private-sector investment as a critical driver of Pakistan’s next phase of economic development.
Sebastian Essl, the report’s lead author, said structural reforms to encourage private investment were necessary to improve living standards, particularly as fiscal resources and foreign exchange remained constrained despite progress in macroeconomic stabilization.
He emphasized that achieving private-sector-led growth would require a clear plan, effective coordination and a sustained commitment to implementing reforms.
The World Bank report identifies several priority areas, including improving the business environment, reforming the tax system, reducing the state’s presence in the economy and expanding access to finance.
Energy, Trade and Privatization Reforms Under Way
The report also recognizes progress in several reform areas, including timely adjustments to power-sector tariffs, continued trade liberalization and the privatization of Pakistan International Airlines (PIA).
Power-sector tariff adjustments helped reduce energy subsidies from 1.1% of GDP in FY25 to 0.8% in FY26. Meanwhile, the government has continued implementing trade liberalization measures under the National Tariff Policy.
According to the report, sustaining progress in these areas and advancing broader structural reforms will be essential to strengthening private investment and supporting long-term economic growth.
World Bank Group’s Engagement in Pakistan
Pakistan has been a member of the World Bank since 1950, receiving approximately $52 billion in assistance since then.
The World Bank’s current portfolio in Pakistan comprises 47 operations, including one regional project, with total commitments of approximately $16.1 billion.
The International Finance Corporation (IFC), the World Bank Group’s private-sector investment arm, has invested and mobilized approximately $22 billion in Pakistan since 1959. Its projects cover areas including renewable energy, financial inclusion, infrastructure, agribusiness, manufacturing, housing, healthcare and trade.
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As of September 30, 2026, the IFC had committed investments of $1.6 billion across 55 projects in Pakistan.
The World Bank’s latest assessment concludes that while macroeconomic stabilization has created an opportunity for stronger growth, Pakistan’s ability to raise incomes and improve living standards will depend on the pace and consistency of structural reforms.
