Reforms launched by the government of President Pervez Musharraf in 1999 "have started showing results in the form of a strong recovery in the economy," the bank said in a report received on Thursday.
For the first time in seven years, gross domestic product (GDP) growth had exceeded six percent in the year ending in June and macroeconomic fundamentals were better than at any time in decades, the Manila-based bank said.
"With sound macroeconomic fundamentals, pick-up in investment, and improvement in relations with India, the Pakistan economy is poised to move to a high growth path in the medium term," it said.
But it cautioned that high oil prices could dampen economic projections.
"If the oil prices continue to remain at current record levels, projections for imports, fiscal deficit, and inflation may have to be revised upward.
"High oil prices could also dampen the global economic recovery, which in turn can lower Pakistan's export growth," the bank said.
On the domestic front, an anticipated shortage of water in main reservoirs posed a major risk for winter crop yields.
Nevertheless Pakistan should use its recovery to "accelerate efforts for poverty alleviation," it said.
Poverty in Pakistan has risen from 20 percent to 33 percent over the past 15 years. Unemployment runs 9.9 percent in urban areas and 7.8 percent nation-wide.
The bank said economic growth alone may not make a significant dent in poverty in the short run and the government should promote employment generation activities and encourage the growth of agriculture and small and medium enterprises to help the poor.