Abdur Rehman

The World Bank has moved Pakistan out of its South Asia grouping into a newly expanded “Greater Middle East” regional bloc, a shift analysts say could significantly reshape the country’s economic outlook.

In its April 2026 economic update, the World Bank placed Pakistan and Afghanistan in the Middle East and North Africa grouping, now renamed “MENAAP,” increasing its members from 22 to 24.

The bloc includes 14 Middle Eastern and eight North African countries such as Saudi Arabia, United Arab Emirates, Egypt, Iran and Israel.

The World Bank described the move as an “administrative and analytical” adjustment, but experts say it could influence Pakistan’s economic direction, particularly in energy, inflation and remittances.

Previously grouped with regional economies such as India, Bangladesh and Sri Lanka, Pakistan will now be compared with wealthier Gulf economies as well as structurally similar developing states.

The reclassification reflects shifting economic realities.

Pakistan’s financial lifeline is closely tied to remittances from Gulf countries, while it shares challenges with MENA economies, including population pressures, job creation, regional instability and a relatively constrained private sector.

The World Bank groups countries using both income levels and regional characteristics.

While income classification determines lending terms, regional grouping shapes policy analysis, economic comparisons and development strategies.

Analysts say the move presents both risks and opportunities. On one hand, Pakistan may benefit from more relevant policy comparisons and lessons in energy management, state-led planning and employment generation from Middle Eastern economies.

On the other hand, comparisons with richer economies such as Saudi Arabia and the UAE could make Pakistan’s performance appear weaker to global investors, potentially affecting its economic perception.

Pakistan is the most populous country in the new grouping, which could strengthen its case for greater development funding.

However, competition for World Bank resources may intensify, particularly with other lower-income members such as Egypt, Jordan, Tunisia and Yemen.

Experts note that if Pakistan leverages its inclusion to attract direct investment and deepen trade ties with Gulf economies, the shift could prove a decisive step toward long-term economic stability.