Shrinking Eid economy

Economic uncertainty took a significant toll on Eid-related spending, which was down by 40%, according to some reports. Spending was about Rs432 billion, the lowest figure in a decade, well off the record of Rs1.1 trillion in 2018 and even lower than the Rs480 billion spent amid Covid restrictions in 2021.

However, some analysts believe spending would have slowed even if the economy wasn’t in a tailspin, because last year saw citizens spend relatively high amounts in a kind of retail therapy after two years of Covid restrictions. But even foot traffic in shopping areas was noticeably lower, as people did not even feel like window shopping, lest they break the bank with an impulse to buy.

However, online shopping did offset some of the loss in sales. Inflation was cited as the biggest culprit, with particular ire pointed at the rising cost of popular — and previously affordable — imported products such as children’s clothing, which saw prices rise even more disproportionately than in other areas due to the rupee’s freefall. Meanwhile, the local textile sector’s problems meant local supply was not readily available to meet the demand for affordable clothing.

The crash in demand for clothes is also emblematic of what was happening in other sectors. After all, people who can’t afford new shirts are unlikely to be going around buying home upgrades or cars, or even new phones and home goods. On that note, jewellery was one of the hardest-hit segments, with many shopkeepers noting that walk-in customers had disappeared and a lot of their sales was through trade-ins rather than cash, as people tried to balance the loss of disposable income with a desire for new jewellery.

One of the few positive takeaways was that charitable donations remained relatively high as a share of total spending, as wealthy and upper-middle-class Pakistanis went the extra mile to help less fortunate people. Unfortunately, the nation can’t survive on charity alone. Hardworking people deserve to enjoy some fruit from their own labour, rather than watching it lose value at record pace.