Artificial intelligence (AI) could reshape Pakistan’s already fragile job market, with educated young workers facing the greatest risks if the country fails to prepare for rapid technological change.
The warning comes from the World Development Report 2026: The Promise of Artificial Intelligence, published by the World Bank.
The report identifies Pakistan among the economies in the Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region that remain vulnerable because of high youth unemployment, weak private-sector job creation, and limited access to quality formal employment.
However, the report also argues that AI offers developing economies a unique opportunity to improve productivity and strengthen essential public services if governments adopt the right policies.
AI Could Reshape Pakistan’s Labour Market
According to the report, AI is expected to automate a growing number of knowledge-based tasks.
As a result, employment opportunities for skilled graduates could shrink unless governments expand quality job creation.
The World Bank believes countries should simultaneously invest in digital infrastructure, workforce reskilling, stronger institutions, and employment opportunities.
Without these reforms, educated young workers could face increasing competition in an already challenging labour market.
AI Is Also an Opportunity, Not Just a Risk
Despite highlighting the risks, the report presents AI as a transformative technology.
The World Bank describes AI as a “general-purpose technology” comparable to electricity and the internet.
Rather than replacing workers entirely, AI can improve productivity across multiple sectors.
Consequently, developing countries can accelerate economic growth by adopting existing AI tools instead of building advanced frontier AI systems from scratch.
Automation Risks Remain Lower in Developing Economies
The report estimates that only 4.5 percent of existing jobs in low- and middle-income countries face immediate automation risks from generative AI.
By comparison, the figure reaches 14.2 percent in high-income economies.
Meanwhile, around 16.2 percent of jobs in developing countries could benefit from significant productivity gains through AI.
That figure remains only slightly below the 18.7 percent projected for advanced economies.
Nevertheless, Pakistan faces additional challenges because skilled services have become an increasingly important source of employment growth.
Consequently, educated workers performing cognitive tasks may experience greater disruption as AI capabilities continue expanding.
Global AI Investment Highlights the Technology Gap
The report also draws attention to the enormous scale of global AI investment.
Combined capital expenditure by five major US AI companies—Alphabet, Amazon, Meta, Microsoft, and Oracle—is projected to reach $775 billion during 2026.
That amount is nearly double Pakistan’s estimated nominal GDP of approximately $408 billion.
Moreover, the planned investment exceeds the size of several national economies, including Bangladesh, Malaysia, Singapore, Thailand, the United Arab Emirates, Vietnam, and South Africa.
According to the report, these figures illustrate the widening technological gap between AI leaders and many developing economies.
World Bank Urges Developing Countries to Act
World Bank Senior Vice President and Chief Economist Indermit Gill encouraged developing countries to view AI as an opportunity.
“AI has thrown developing economies a lifeline, and they should seize it,” Gill said. “They do not need large models or big data centers to reap its benefits.”
Instead, the report recommends adopting smaller and more affordable AI models that address local needs.
These systems can improve healthcare, education, agriculture, judicial services, and public administration without requiring massive investments.
The report highlights practical examples from several countries.
These include AI-assisted diabetes screening in Bangladesh, AI-powered weather forecasting in India, and mobile phone-based tutoring systems in Ghana.
According to the report, these initiatives have already improved public services and learning outcomes.
Infrastructure and Skills Will Determine Success
The World Bank advises developing countries against pursuing costly AI sovereignty through advanced foundation models.
Instead, it recommends a phased strategy focused on adopting existing technologies first.
Countries should then adapt those technologies to local languages, institutions, and public needs before expanding their capabilities.
The report also warns that many developing economies still lack reliable electricity, affordable internet access, sufficient computing capacity, local-language datasets, and skilled professionals.
Without these foundations, AI could widen inequality, increase dependence on foreign technology providers, strengthen market concentration, and weaken public trust.
Governments Must Prepare Before the Opportunity Narrows
World Development Report 2026 Director Gaurav Nayyar stressed the importance of acting quickly.
“The window to get this right is narrow,” said Gaurav Nayyar, Director of the World Development Report 2026. “AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations.”
The report recommends prioritising investment in electricity networks, digital connectivity, computing infrastructure, workforce development, and local data ecosystems.
Furthermore, governments should encourage responsible AI adoption through existing legal frameworks and voluntary industry standards.
The World Bank concludes that developing economies can gain the greatest benefits by deploying practical AI solutions across agriculture, healthcare, education, and public services instead of investing heavily in large language models.
