Pakistan ranks among world's top five digital services suppliers: World Bank

October 07, 2026 (MLN): Pakistan is emerging as a major supplier of artificial intelligence services in the Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region, ranking among the top five global providers across more than 2,700 skill areas, the World Bank said, while warning that the country also accounts for nearly half of the region's extreme poor.

According to the Middle East, North Africa, Afghanistan & Pakistan Economic Update, From Divide to Opportunity: AI, Jobs, and Growth, the World Bank's October report, Pakistan is positioning itself as a talent-led exporter of AI services.

It is backed by about 75,000 information technology graduates every year and record ICT services exports of $4.6bn in FY26.

Pakistan shares its top-five ranking on major online platforms with Egypt.

The country is also building a domestic AI ecosystem and developing "small AI" solutions to deliver digital services suited to local contexts and languages.

It is one of the region's biggest data-centre hosts, with the largest number of facilities in MENAAP alongside Saudi Arabia and the UAE, which anchor the region's data-centre capacity.

The report said Pakistan is pursuing what it described as "AI sovereignty", meaning a home-grown ecosystem in which AI serves national priorities.

A $1bn programme running through 2030 is meant to fund shared GPU infrastructure, a sovereign multilingual AI model, 1,000 AI PhD scholarships and training for one million non-IT professionals.

Pakistan has also set a target of training 200,000 people in AI every year and offering 3,000 postgraduate scholarships.

Pakistan is among 14 of the 21 MENAAP economies to have published a national AI strategy.

The strategy marks agriculture as a key area for AI use, including pesticide and fertiliser management, irrigation, yield estimation, trade decisions and food security.

It also flags social risks such as gender bias, the digital gender divide and the wage gap, along with data privacy and regulatory gaps.

The World Bank said Pakistan performs strongly on digital infrastructure compared with income peers but remains weak on innovation and economic integration. Across the region, it said, economies are entering the AI transition at very different speeds.

Saudi Arabia and the UAE rank among the world's top 25 for both AI model development and high-performance computing, whereas fragile economies still struggle with basic institutional and infrastructure constraints. Middle-income countries, Pakistan included, sit in between, with ambition and growing technical capacity but wide gaps in implementation.

The region's largest readiness gap lies in regulation and institutional capacity, where MENAAP economies lag income peers on adaptable legal frameworks, enforcement and accountability.

Limited private-sector dynamism is another obstacle. Only about 24% of firms in the region invest in physical capital, against 37% in other emerging and developing economies, while just 19% provide formal training, compared with 30% elsewhere. The World Bank said private-sector reform would be a precondition for an effective AI-led growth strategy.

For Pakistan's large services workforce, which depends heavily on global freelance and outsourcing markets, AI brings both opportunity and risk.

The report said Pakistan recorded the highest absolute number of AI-related conversations in the region, though usage is concentrated in graphic design, content creation and translation rather than software development, possibly reflecting its large presence on international freelance platforms.

Integration into global online markets opens opportunities but leaves workers exposed to shifts in demand as AI starts replacing some outsourced tasks.

Demand for digital and AI skills has risen sharply, with Pakistan among the countries recording double-digit percentage-point gains in the share of job postings requiring digital skills between 2021 and 2025.

The World Bank said the scope for AI to augment workers exceeds the immediate threat of automation across the region.

Automation risk affects roughly 0% to 10% of jobs, with the smallest shares in Afghanistan and Pakistan, while 13% to 20% of jobs have potential for AI-driven augmentation.

Even so, Pakistan has relatively high exposure among tertiary-educated workers, as graduates are concentrated in cognitive occupations more open to AI. Women are less exposed overall because they are disproportionately employed in crafts, elementary occupations and skilled agricultural work.

Exposure is also concentrated in government and public enterprises, where clerical, ICT and professional jobs are heavily represented, and among self-employed workers and employers in clerical, professional, ICT, business administration and managerial roles.

On poverty, the report said Pakistan accounts for about 48% of people in MENAAP living below the $3-a-day line, while Afghanistan, Syria and Yemen together account for another 47%.

Pakistan's poverty rate rose by 6.4 percentage points at the $3-a-day line and by 3.2 percentage points at the $4.20-a-day line between FY19 and FY25, following the COVID-19 pandemic, the devastating 2022 floods, a macroeconomic crisis marked by high inflation and currency depreciation, and a prolonged adjustment that eroded real incomes and jobs.

MENAAP is the only region where poverty remains above pre-pandemic levels and is still rising. In 2024, 14.3% of its population lived on less than $3 a day, against 10.4% globally, while 26.9% lived below $4.20 a day, compared with 18.9% worldwide.

The region now holds 14% of the world's extreme poor, second only to Sub-Saharan Africa. Significant shares of people in Afghanistan, Djibouti, Lebanon and Pakistan face crisis-or-worse food insecurity.

The World Bank said fuel price increases have added to pressure on household incomes.

Gasoline prices have risen 40% or more in Lebanon, Pakistan, Syria and the UAE since the start of the conflict, and diesel prices have climbed over 40% in Pakistan and the West Bank and Gaza.

Higher fuel costs have contributed to protests in some economies, including Pakistan. Pakistan has introduced targeted fuel and farm support to cushion vulnerable households.

The country also remains exposed to external shocks. Higher oil and commodity prices can stoke inflation, shrink fiscal space and raise external financing costs, while a prolonged slowdown in Gulf tourism, construction and related services could weaken remittances.

A stronger-than-usual El Niño forecast for late 2026 could bring heat stress, erratic rainfall, drought, localised flooding and crop losses, with changes in monsoon patterns a particular risk.

The report added that transport, aviation, shipping, petrochemicals and much of industry still depend on hydrocarbons, leaving oil-importing economies like Pakistan vulnerable to fresh energy price shocks.

Despite these pressures, the World Bank projects Pakistan's economy to grow 3.7% in FY26, up from 3.2% in FY25, supported by resilience in services, manufacturing and livestock.

It said higher commodity and transport costs would keep pressure on inflation and the external balance, though strong domestic activity is expected to outweigh them.

Pakistan is also gradually expanding into higher-technology manufacturing exports, following Tunisia and Morocco, which lead the region at over 7% and 5% of manufacturing exports respectively, and Egypt.

Financial markets have not priced in a lasting deterioration in Pakistan's sovereign creditworthiness, the report said. Sovereign bond spreads widened across most MENAAP economies in March before narrowing, and by early September Pakistan's spreads stood below their February 27 levels, among the largest declines in the region.

Pakistan's equity market fell sharply in March before recovering to near January levels, suggesting domestic earnings prospects continued to shape investor sentiment alongside the regional security shock.

The World Bank said AI is moving quickly from a frontier technology to a general-purpose tool affecting firms, workers and governments.

For developing economies like Pakistan, the key question is how fast it spreads, who can use it productively, and whether it narrows or widens gaps in productivity and opportunity.

Pakistan's large digitally oriented workforce, expanding data-centre base, growing online services exports and government-backed $1bn AI programme place it among the economies seeking to turn AI adoption into a broader source of growth, even as it grapples with gaps in innovation, regulation and private-sector capacity.

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