AI adoption may hit Pakistan’s job market, World Bank warns

ISLAMABAD: Pakistan’s already strained job market could face fresh pressure from artificial intelligence (AI), as the World Bank warns that AI-driven job displacement may hit countries where the creation of high-quality formal jobs is already weak.

The report World Development Report 2026: The Promise of AI notes that Pakistan is among the countries in the Middle East, North Africa, Afghanistan and Pakistan (MENAAP) region that are particularly vulnerable due to high youth unemployment and limited private-sector job creation.

Educated young people entering the labour market are expected to face the greatest risks as AI increasingly automates knowledge-intensive tasks.

According to the World Bank, the impact of AI-driven displacement is especially severe in economies where high-skilled services have been a key source of employment growth. With Pakistan already struggling to generate quality jobs, the report cautions that rapid AI adoption could further narrow employment opportunities for skilled graduates unless accompanied by policies that promote job creation, re-skilling, and digital competitiveness.

The World Bank highlighted the massive scale of global artificial intelligence (AI) investments, revealing that the projected 2026 capital expenditure of five US AI hyperscalers—Alphabet (Google), Amazon, Meta, Microsoft and Oracle—will reach USD 775 billion, far exceeding Pakistan’s nominal GDP of USD 408 billion.

The combined AI spending of these technology giants will also surpass the economies of countries such as Argentina, Singapore, Thailand, the United Arab Emirates, Vietnam, the Philippines, Malaysia, Bangladesh, Colombia, South Africa and Iran. The report underscores the widening gap between global AI leaders and developing economies as investment in computing infrastructure accelerates.

Artificial intelligence (AI) could allow developing countries to do in a decade what might otherwise take a century—provided that governments act swiftly to close the gaps in power, connectivity, skills, and institutional quality that threaten to leave them behind, according to the Bank report.

The report finds that jobs in high-income countries are more than three times as likely to be at risk of automation by generative AI than those in low- and middle-income countries, where 4.5 percent of existing jobs are at risk, compared with 14.2 percent in high-income countries. At the same time, 16.2 percent of jobs in developing economies could see productivity meaningfully boosted by AI — close to the 18.7 percent expected in high-income countries. The greatest promise for developing countries lies not in replacing workers, but in amplifying what they can do.

“AI has thrown developing economies a lifeline, and they should seize it”, said Indermit Gill, Senior Vice President and Chief Economist of the World Bank Group. “They do not need large models or big data centers to reap its benefits. By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions. But they must hurry: AI is spreading faster and is more context-specific than earlier general-purpose technologies like electricity and the internet. World Development Report 2026 shows how developing countries are responding—and succeeding.”

The report is the first comprehensive assessment of AI’s implications for developing countries, revealing how businesses and governments in these countries have begun to use AI. It finds that AI is already helping people, businesses, and governments solve problems, analyse information, improve forecasts, and deliver services at a larger scale. These capabilities are especially valuable in countries where trained professionals, reliable records, and public capacity are often limited. AI tools can make it easier for doctors to diagnose patients, farmers to improve crop decisions, and businesses to become more productive. Governments, too, could use AI to improve tax collection, social programs, disaster response, health care, and education.

Developing economies today are in the midst of their weakest average growth performance in three decades. AI could significantly boost that performance before the end of the 2020s while delivering tangible benefits to people, the report finds. The opportunity is not guaranteed, however. The most advanced AI systems are being built by a small number of countries and companies, while many developing economies still lack the power, internet access, data, skills, and institutions needed to use AI effectively. Without deliberate action, AI could widen gaps between countries, increase inequality within them, concentrate market power, weaken trust in public institutions, and create new risks for safety, rights, and social cohesion.

The report sets out a clear, three-step path: adopt available tools, adapt them to local conditions, and — over time — advance toward frontier AI development. This sequenced approach helps countries avoid costly and inefficient attempts to replicate advanced AI before the foundational conditions are in place.

“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. Developing countries that build the foundations now—power, connectivity, skills, and institutions—will be positioned to adopt and adapt AI for their people.”

None of this is possible without first investing in the basics. In Sub-Saharan Africa, nearly one-third of rural schools still lack reliable electricity, and more than two-thirds lack dependable internet access. Closing this gap is already a priority — the World Bank Group is working with partners through Mission 300 to provide energy access to 300 million people across Sub-Saharan Africa by 2030, laying the foundation for broader digital and AI inclusion.

Countries also need to expand access to computing power and improve the availability of local data, including in local languages, so AI tools can be tailored to serve their own people and economies. Governments should make it easier for new firms to attract investment, test ideas, and scale what works. Many AI pilots are already underway, but the bigger challenge is knowing which ones deliver results. Better evidence, stronger skills, and clearer procurement and evaluation frameworks will be essential.

Building public trust is equally important. As AI evolves rapidly, governments should begin by drawing on voluntary industry standards to encourage responsible use, anchored in international cooperation to prevent regulatory fragmentation. When voluntary measures fall short, governments should apply existing laws to address harms directly. Improved public services and better learning outcomes in schools will reinforce trust — but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover.

AFP adds: The World Bank on Tuesday called on developing countries to embrace artificial intelligence technology tools to deliver better governance outcomes, warning that they risked being left behind if they failed to do so.

“AI has thrown developing economies a lifeline, and they should seize it,” Indermit Gill, chief economist of the World Bank Group, said as the organization launched its annual World Development Report.

“They do not need large models or big data centers to reap its benefits,” he added, advocating for the adaptation of lower-cost AI tools to local conditions to deliver results in the health, education, justice and agricultural sectors.

Advanced AI models — largely developed in the United States and China — offer the ability to quickly analyze data and automate many tasks that otherwise take skilled humans longer to do.

These AI models, however, require huge data centers and large amounts of complex computing power, using massive amounts of electricity and water — with implications for climate change. “Developing economies today are in the midst of their weakest average growth performance in three decades,” said a World Bank statement accompanying the report. “AI could significantly boost that performance before the end of the 2020s while delivering tangible benefits to people.”

The report calls for countries to use AI to “help extend otherwise costly medical, legal, educational, and agricultural services to underserved billions — doing in a decade what might otherwise take a century.”

Lower-income countries have struggled through the 2020s, hit by a series of successive shocks that saw the World Bank earlier this year dub it a “lost decade” for their economic growth.

The Bank has lowered its 2026 global growth forecast to its lowest level since the pandemic, with the economic fallout of the Iran war battering countries around the world.

The shock has hit low-income and developing countries hardest, with Asia the worst-affected region.

The Bank’s new report advocates for developing countries to start working with localized AI tools and solutions now, and to invest in electricity generation and distribution; expand access to computing power; and improve the availability of local data.

“The window to get this right is narrow,” said Gaurav Nayyar, director of the report. “AI presents a once-in-a-lifetime opportunity to solve problems that have resisted solutions for generations,” he added.

For the 6.8 billion people — 83 percent of humanity — who live in low-income and developing countries, AI tools will need to be adapted to meet their needs.

The report shares examples of AI applications in governance, such as to increase diabetes screening volumes in Bangladesh, or in reducing costs for Indian farmers through advanced weather forecasts.

The solutions, the report stresses, will need to meet people where they are.

“For example, AI solutions will need to be delivered through voice calls on basic mobile phones for those who cannot read or afford smartphones,” it says.

“Simply importing an AI model does not mean it will work well locally.”

• Stark warning

The report calls for policymakers to also build public trust as they expand AI use.

“Improved public services and better learning outcomes in schools will reinforce trust — but if AI embeds bias in government decisions or erodes data privacy, that trust will be difficult to recover,” said the statement.

The report delivers a stark warning, too: “AI could widen gaps between countries, increase inequality within them, concentrate market power, weaken trust in public institutions, and create new risks for safety, rights, and social cohesion.”

And while risks to employment in developing countries are low at the moment, it warns that in the long run AI tools could cut off economic mobility by eliminating many of the middle-class jobs that enable it.

The report was written with the aid of several of the world’s most advanced AI tools, including offerings from OpenAI, DeepSeek, Google and Anthropic, according to a disclosure.

Copyright Business Recorder, 2026