IMF sees the region including Pakistan shrinking 1.3%; World Bank says incomes could triple

Two international lenders published reports about Pakistan’s economy on October 22, and the headlines seem to point in opposite directions. Both are worth understanding.

The IMF: a hit from the Iran war

The IMF’s regional outlook, reported by Reuters and carried by Arab News and Dawn, says output across the Middle East, North Africa and Pakistan will shrink by 1.3% in 2026, then bounce back to 6.6% growth in 2027.

One important detail: the 1.3% is a regional figure, combining Pakistan with the Middle East and North Africa. Some headlines read it as a Pakistan-only number, but the Reuters report gives no separate figure for Pakistan.

Why the fall? The IMF blames the US-Israeli war on Iran, which damaged energy production, shipping, tourism, trade and confidence. Oil exporters were hit hardest. Oil importers like Pakistan held up better, helped by remittances and quick policy responses.

The IMF assumes the conflict eases in early 2027. It warns of “exceptionally high uncertainty”, and says the biggest risk is “further disruption to energy production and trade routes” that would push fuel prices up.

The World Bank: ‘escape velocity’

The same day, the World Bank released its Pakistan Development Update, titled “Attaining Escape Velocity”. According to Aaj News and ProPakistani:

• Pakistan’s economy grew 3.7% in FY26, up from 3.2% the year before.
• The government ran a record primary surplus of 2.9% of GDP.
• Energy subsidies fell from 1.1% to 0.8% of GDP after electricity tariff changes.
• Pakistan returned to international markets with a $3 billion Eurobond, and S&P and Moody’s upgraded its ratings.

The big headline: if Pakistan speeds up reforms, growth could reach 6.2% to 6.9% a year, and incomes could roughly triple by 2050, to about Vietnam’s level today.

The catch: real income per person is growing at only about 1.6% a year. As the report puts it, reaching that goal “will require much faster economic growth than Pakistan currently records.”

Country director Bolormaa Amgaabazar said: “Pakistan has made real progress in restoring stability, and markets have taken notice.” The World Bank wants a better business environment, tax reform, a smaller state role in the economy and easier access to finance.

What this means for you

The short version: Pakistan’s economy is more stable than it was two years ago, but it is not growing fast enough to make most families feel richer. The Iran war is the biggest outside risk, mainly through oil prices, petrol and electricity bills.

Tripling incomes by 2050 is possible on paper, but only with reforms that past governments have repeatedly started and dropped.