The World Bank on Wednesday highlighted structural challenges in Pakistan, warning that slow and uneven reforms continue to impede economic diversification, job creation, and inclusive growth. According to the Washington-based lender, persistent low productivity and constrained income growth across multiple sectors have limited opportunities for Pakistan’s workforce and slowed improvements in living standards.
Responding to questions over recent revisions in growth and poverty estimates, the World Bank clarified that changes were driven by “scheduling reasons” rather than methodological flaws. Despite criticism over frequent updates, the Bank emphasized that its projections are based on simulation models, which provide directional insights but lack the precision of survey-based data. The institution urged Pakistani authorities to implement regular household surveys to enhance the accuracy of future economic and social indicators.
For fiscal year 2025, the World Bank projects Pakistan’s GDP growth at three per cent, with a modest decline in poverty from 25.3% in FY2024 to 22.2% in FY2025. The decline is expected to be supported by growth in construction and logistics sectors, which employ roughly a quarter of the country’s poor, and easing food inflation, which has improved household purchasing power. However, high informality in these sectors continues to leave low-skilled workers vulnerable to economic shocks, while rural poverty remains entrenched due to weak agricultural growth.
Tobias Haque, the World Bank’s lead economist in Pakistan, underscored the need for faster economic expansion. “A much faster rate of economic growth will be required to sustainably improve living standards and change the country’s poverty trajectory,” he said, highlighting that the current pace of growth is insufficient to generate meaningful improvements in income distribution or social mobility.
The Bank also addressed discrepancies between its various reports — including the Pakistan Development Update, Macro-Poverty Outlook, and Regional Economic Update — noting that differences in growth forecasts largely reflect the timing of data collection and publication. For instance, initial “flood scenario” projections estimated FY2026 GDP growth at 2.6%, but subsequent updates revised this figure to 3% based on new government and UN data showing smaller-than-expected agricultural damage.
Experts suggest that Pakistan’s economic constraints stem from a combination of slow structural reform, high sectoral informality, and insufficient investment in human capital. While pockets of growth in services and construction provide some relief, the World Bank stresses that meaningful improvements in productivity, income distribution, and employment require accelerated reform efforts, better data collection, and stronger institutional support.
The Bank’s findings serve as a reminder that incremental growth and modest poverty reductions will not be sufficient to transform living standards or reduce entrenched inequalities. Without targeted structural reforms, Pakistan risks prolonging economic stagnation and leaving significant portions of the population vulnerable to shocks.
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