Pakistan could substantially improve living standards and potentially triple incomes by 2050 if it accelerates structural reforms and sustains economic growth, according to a new World Bank report.
The report states that following progress in macroeconomic stabilisation, Pakistan has an opportunity to achieve stronger, sustained growth and generate more employment. Recent economic policies have helped stabilise the economy and maintain growth despite the effects of conflict in the Middle East.
Pakistan’s real gross domestic product (GDP) growth rose to 3.7 per cent in FY26 from 3.2 per cent in FY25. Higher revenues and spending controls also helped the government achieve a primary fiscal surplus of 2.9 per cent of GDP in FY26, while strong remittance inflows supported the rebuilding of foreign exchange reserves.
The improvements were reflected in credit rating upgrades by international agencies S&P and Moody’s. Pakistan also regained access 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,” World Bank Country Director Bolormaa Amgaabazar said.
However, she noted that real per capita growth, which measures the increase in income per person, remained around 1.6 per cent, highlighting the need for urgent reforms to accelerate economic progress.
According to the report, Pakistan could achieve sustained annual growth of between 6.2 and 6.9 per cent by upgrading its policies and institutions to levels comparable with those of an average middle-income country. Such progress could enable Pakistan to reach Vietnam’s current income level by 2050.
Sebastian Essl, the report’s lead author, said structural reforms aimed at encouraging private investment were essential to improving living standards, particularly as fiscal resources and foreign exchange remained constrained.
He added that achieving private-sector-led growth would require a clear strategy, effective coordination and consistent implementation of reforms.
The report outlines a broad reform agenda that could help Pakistan attain by 2050 the per capita income levels of countries currently classified as upper-middle-income economies.
Several recommended measures build on initiatives already underway. These include timely adjustments to electricity tariffs, which helped reduce energy subsidies from 1.1 per cent of GDP in FY25 to 0.8 per cent in FY26, continued trade liberalisation under the National Tariff Policy and the privatisation of Pakistan International Airlines (PIA).
The report emphasises that sustaining economic progress will require further measures to improve the business environment, reform the tax system, reduce the state’s role in economic activity and expand access to financing.
It concludes that while macroeconomic stability represents an important step forward, deeper structural reforms and greater private-sector investment will be crucial to achieving faster growth, higher incomes and better employment opportunities over the coming decades.
