World Bank warns growth insufficient to create jobs, boost incomes

Business Recorder · 23/10/2026، 12:47:19 AM

ISLAMABAD: The World Bank has warned that Pakistan’s economic growth could remain insufficient to generate adequate jobs and improve per capita income, recommending that the country must move beyond macroeconomic stabilisation and undertake far-reaching structural reforms to achieve faster, sustained growth, improve household incomes and create productive employment. In its latest Pakistan Development Update, titled “Attaining Escape Velocity”, the World Bank projected economic growth at 3.8 percent for fiscal year 2027. The Bank has projected growth to reach only 4.5 percent by fiscal year 2031 under the baseline scenario, while structural reforms could lift it above 6 percent. Pakistan had achieved important macroeconomic gains in fiscal year 2026, but rising poverty, inadequate job creation and weak productivity continued to undermine the country’s economic prospects. Without sustained reforms, the report warned, Pakistan’s growth trajectory would remain inadequate to generate sufficient productive employment, reduce poverty and achieve meaningful convergence with upper-middle-income economies. The Bank cautioned that prolonged conflict in the Middle East, higher energy prices, adverse weather conditions associated with El Niño, tighter external financing and fiscal slippages could undermine the economic outlook. The report revealed that Pakistan’s poverty rate increased from 22 percent in 2018-19 to 29 percent in 2024-25, reflecting declining real labour incomes amid high inflation and sluggish productivity growth. It noted that approximately 3.6 million people reach working age every year, while one in six new labour market entrants has been left without work since 2018. Although the economy generated 17.7 million net new jobs during this period, most were concentrated in low-paying, low-productivity sectors. Unemployment stood at 7 percent in 2024, with women and young people disproportionately affected, while annual labour productivity growth averaged only 0.