Pakistan Growth Too Slow To Improve Living Standards, World Bank Says
The nation’s economy is expected to grow 3% in the year ending June and 3.4% next financial year, according to the World Bank.
Pakistan’s economy is expanding too slowly to meaningfully improve living standards or create enough jobs for its growing population, according to the World Bank.
“Business as usual is not good for the economy,” Mukhtar Ul Hasan, an economist at the World Bank, said in a briefing in Islamabad. “Pakistan’s growth potential has been declining for decades” due to weak competitiveness, limited reforms, and recurring crises, Hasan, the lead author of a report on the country’s economy, said.
The nation’s economy is expected to grow 3% in the year ending June and 3.4% next financial year, according to the World Bank. The expansion remains far short of the pace needed to absorb the 1.6 million new entrants joining the labor force each year, said Hasan. Pakistan’s central bank expects growth to be in the upper half of a range of 3.25%-4.25%.
The outlook underscores the structural challenges confronting South Asia’s second-largest economy, where repeated crises have forced bailouts. The World Bank urged policymakers to shift from short-term stabilization to a long-term reform agenda focused on productivity, exports and private sector investment to lift incomes and reduce vulnerability.
Still, Pakistan’s economy is regaining stability after the government narrowly avoided defaulting on its debt two years ago. That and weak consumer demand has seen consumer prices drop below 10% in the past year after a record wave of inflation and currency devaluations in the previous few years.
Easing inflation decreased poverty to 22% in fiscal 2025 from 25% the previous year, according to Christina Wieser, senior economist at the bank. It is projected to stay at around 21%, said Hasan.
Pakistan under its loan program with the International Monetary Fund has increased energy prices and is in the process of selling state-owned enterprises, including loss-making Pakistan International Airlines.
Pakistan must push through “deep and meaningful reforms” to move the country toward a faster development trajectory, said Hasan.
