Over the past 20 years, the average household income in Pakistan has increased by 69 percent, while the growth in household expenditures has only increased by 49 percent, according to a report published by the World Bank (WB).
According to the data, the typical income of a household went from being about Rs. 16,000 in the year 2001 to being over Rs. 26,000 in 2018, with an expected pattern of ongoing development in the years to come. During the same time period, costs rose from approximately 18,000 to 24,000 rupees, which is a relatively modest increase.
According to the data, over this time period, the net worth of households also climbed by 25 percent, going from 61.7 points on the index to 77.6 points.
Read more: Pakistanis’ wealth largely seen in residential buildings: World Bank
Economists believe that this is due to an increasing difference between income and expenditures, which has provided Pakistanis with the opportunity to expand their savings over the course of the past two decades.
According to the World Bank report, by the year 2018, rural households had accumulated an average of 32 percent more wealth than urban households.
From 2012 to 2020, Bangladesh currency dropped barely 1% against the USD, Pak Rs went down by 45%. BD exports were up 39% in 2020 compared to 2012 and Pakistan's were down by 13%. (Source: World Bank data). Why? We need real not doctrinal or ideological analysis. pic.twitter.com/FguIhFEtxW
— Yousuf Nazar (@YousufNazar) May 8, 2022
According to the findings, an individual’s income and household expenses both rise with age; however, an individual’s income begins to exceed their household expenses in their early 40s. Because of this, the rate of saving has increased by 20 percentage points by the time people reach the age of 55.
Read more: Pakistan’s remittances grew by 26% in 2021: World Bank
Because it is less risky and more liquid than other assets such as business durables or stocks, more than 80 percent of Pakistanis opt to save in the form of residential dwellings and land. Other types of assets include stocks and business durables.
However, currently Pakistan’s foreign currency reserves have fallen to as low as $9.8 billion, hardly enough for five weeks of imports. The Pakistani rupee has weakened to record lows. The new government needs to cut spending rapidly now as it spends 40% of its revenues on interest payments
Pakistan struck a crucial IMF deal this week. The breakthrough could not be more timely, with high energy import prices pushing the country to the brink of a balance of payments crisis.