ISLAMABAD: Pakistan could nearly triple incomes by 2050 by accelerating structural reforms and raising annual economic growth to 6.2–6.9%, the World Bank said on Thursday, urging the government to strengthen the business environment and expand private-sector investment.
In its latest Pakistan Development Update, titled “Attaining Escape Velocity,” the global lender said Pakistan’s progress in macroeconomic stabilisation had created an opportunity to achieve faster, sustained growth and generate more jobs, but real per capita income growth remained sluggish at around 1.6%.
The report said reforms that improved Pakistan’s policies and institutions to the average standard of middle-income countries could sustain annual economic growth of 6.2–6.9%. This could enable the country to reach Vietnam’s current income level by 2050 and attain per capita incomes comparable to countries currently at the upper-middle-income threshold.
The World Bank said Pakistan had made progress in restoring macroeconomic stability despite the effects of the Middle East conflict. Real gross domestic product (GDP) growth increased to 3.7% in fiscal year 2026, compared with 3.2% in FY25.
Revenue growth and restraint in public spending helped the country achieve a record primary fiscal surplus of 2.9% of GDP in FY26, while strong remittances supported the rebuilding of foreign exchange reserves.
The improvements also contributed to credit rating upgrades by S&P and Moody’s and enabled Pakistan to return to international debt markets through the issuance of a $3 billion Eurobond.
“Pakistan has made real progress in restoring stability, and markets have taken notice,” said Bolormaa Amgaabazar, World Bank country director for Pakistan. However, she cautioned that real per capita growth, which measures the increase in income of the average Pakistani, remained stuck at around 1.6%, making reforms to accelerate growth urgently necessary.
The report argued that macroeconomic stabilisation alone would not deliver higher living standards without structural changes capable of encouraging investment, improving productivity and creating employment.
“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, lead author of the report.
He said achieving private-sector-led growth required a clear plan, coordination and sustained implementation of reforms.
The World Bank identified several priority areas, including improving the business environment, reforming the tax system, reducing the state’s presence in economic activity and expanding access to finance. These measures, it said, would help mobilise private investment and strengthen the foundations for long-term growth.
The report also acknowledged reforms already under way, including timely electricity tariff adjustments, implementation of the National Tariff Policy and the privatisation of Pakistan International Airlines.
Energy-sector tariff adjustments helped reduce energy subsidies from 1.1% of GDP in FY25 to 0.8% in FY26, according to the report. Continued trade liberalisation under the National Tariff Policy was also identified as part of the reform agenda.
The World Bank said sustained implementation would be critical to translating these measures into higher productivity, stronger investment and improved household incomes.
The report’s central message was that Pakistan had moved beyond an immediate focus on stabilisation but needed faster and deeper reforms to achieve a lasting improvement in living standards. Without stronger investment and productivity growth, gains in macroeconomic stability alone would be insufficient to deliver the income growth needed to close the gap with more prosperous economies.