Your export crisis is self-inflicted: World Bank warns Pakistan of looming economic breakdown
New Delhi, Nov 17 – The World Bank has warned Pakistan that its export slump is not a short‑term hiccup but a result of deep, long‑standing problems. In a sharp assessment, the international lender said weak exports stem from inconsistent policies, distorted markets, and a stubborn failure to reform.
The report urged Pakistan to switch to a market‑driven exchange rate, cut soaring energy and input costs, and overhaul trade deals that have delivered little benefit. It said that in the 1990s exports were about 16 % of Pakistan’s GDP, but by 2024 the share had fallen to just 10 %. Meanwhile, neighbours such as Vietnam, Bangladesh and India are gaining ground, and the World Bank estimates Pakistan could be losing nearly $60 billion in potential exports because of poor policies and governance gaps.
A key recommendation is to let the currency float freely. The Bank says that state‑run intervention in the interbank market pushes Pakistan into cycles of false growth followed by sharp external crises. A flexible exchange rate would boost exports, attract foreign investment and curb speculation on the dollar. The move would require political courage and may trigger short‑term inflation, but it is seen as a long‑term win for the economy.
High business costs also weigh on manufacturers. Electricity prices are almost double those of competitors like Bangladesh and Vietnam, and heavy surcharges, cross‑subsidies and taxes add to the burden, pushing firms away from global competition. Exporters also battle slow tax refunds, power outages and bureaucratic red tape, weakening their worldwide competitiveness.
Trade agreements are another weak link. With 10 bilaterals and regional accords, most are outdated and underutilised. The China‑Pakistan Free Trade Agreement is the only deal with depth, yet it still favours China more than Pakistan. Other deals with Malaysia, Sri Lanka and regional partners are narrow in scope. The World Bank says Pakistan’s negotiators lack technical skills and industry input, producing papers that look impressive on paper but deliver little in practice. Strengthening negotiation teams and consulting businesses more closely are recommended steps.
The report also points out the burden of Pakistan’s oversized state machinery. More than 200 state‑owned enterprises and heavy bureaucracy crowd out the private sector. While privatization, regulatory simplification and governance reforms have been repeatedly discussed, political resistance and vested interests have stalled progress.
In short, the World Bank’s message is clear: Pakistan needs bold, market‑based reforms— from a flexible currency and lower energy costs to smarter trade deals and a leaner state sector— to revive its export engine and secure long‑term growth.
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