A recent Gallup and Gilani Pakistan survey of almost 4 out of 5 Pakistani households showed that they had not saved a single penny of their income over the last three years. The paper outlines the weakened financial position of an economy that has been beset by incessant inflation and low economic growth.
According to the survey, 78% of the people surveyed confessed that they saved nothing. Only those who did accomplish the feat had a 4% average savings rate. Just 13% said they saved between 1-10 percent of their income, and only 2 percent saved between 11-20%.. Less than 1 percent controlled more than 30 percent savings. These results highlight how little financial buffer there is to support the majority of families.
The total savings rate in Pakistan is 7.4% of GDP, half of the average of 27% in Asia and only one-fifth of the 41% average of East Asia. Disposable incomes were severely drained by the war in Russia-Ukraine, skyrocketing energy prices, and 38% inflation in 2023. More recent floods and shortages of vegetables added to strained budgets.
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Experts caution that since such reserves are scarce, families cannot afford unexpected costs and price spikes. Already, the Governor of the State Bank of Pakistan Jameel Ahmed has attributed the dependency on foreign inflows as the cause of the recurring currency crises and inflationary pressure to a poor savings culture within the country.
