KARACHI: Pakistan is one of the top 10 fastest growing markets in the worldin terms of disposable income, said Euromonitor International in a forecastfor 2017-2022.
The London-based global market research firm says Pakistan’s savings ratioas a percentage of disposable income has declined to 3.9% in 2016, thefirst drop in three years from 4% as of 2015, which signifies that themillennials are moving towards a more consumerism-driven economy.
Sharing details of its findings with Pakistan Today, the research giantsaid annual disposable income in Pakistan grew by 8%, catapulting thecountry to 23rd position in the world. This was a strong indicator, saysthe report, of the fact that consumption in the country is on the rise, andwill continue to grow as well, driving the retail market further.”
Responding to a question, the research firm said, one of the primary growthfactors driving the country’s retailing value sales was the young consumerbase of the country, which in 2017 was at an average 22.6 years of age, andis expected to be 23.9 years in 2022. It shows the country will continue tohave a very young demography: millennials who tend to spend more ascompared to the previous generation.
“The primary consumer and taxpaying population of the country is young andexperimental. They tend to save less and spend more,” the report saidbacking the statement with the country’s overall consumer expenditure,which grew by 8% between 2015 and 2016, making Pakistan one of the top 30countries in the world in terms of expenditure growth.
Thanks to the influence of social media and internet usage, the agencysaid, the millennials are more aware of international brands. Consumers inPakistan are the ‘perfect’ ones right now, it said, adding, the middleclass households in the country is growing on a year on year basis, therebyincreasing the primary consumer base of the country.
According to Euromonitor, consumer expenditure as aGDP percentage increased from 79.8% in 2015 to 81.1% in 2016, makingPakistan one of the most lucrative markets for consumer goods and durables.
It is pertinent to mention here that Euromonitor’s forecast was based onfixed exchange rate, which remained steady in the last two years – tradingin the range of Rs105-106 to a US dollar – when the research data wascollected. However, the rupee fell more than 4% earlier this month andtraded above Rs110 to a dollar after the government decided to let it slidein response to the challenges it faces on external front: rising currentaccount deficit and shrinking dollar reserves.
To reverse widening external imbalances, the government has recently takena number of policy decisions to curb spending and reduce imports. Some ofthese include imposition of regulatory duties on non-essential imports anddevaluation of rupee. In the wake of recent developments, market analystsare anticipating the central bank will now resort to tight monetary stanceto maintain fiscal discipline.