Uneven recovery

Pakistan’s recovery is enriching the wealthy while poverty deepens, the middle class erodes

Pakistan's celebrated economic stabilisation efforts may have addressed several key indicators, but on closer inspection, it becomes unreservedly clear that the beneficiaries of this recovery are almost all people who were already among the wealthiest in the country. Beneath the headline growth and booming stock market is a devastating "K-shaped" recovery that is enriching the affluent while crushing the poor and hollowing out the middle class. And while such recoveries are a frequent occurrence in several countries, the intensity of the curve raises legitimate questions about how the government plans to lift the poor, who now comprise more than half the country's population, according to several publications.

Since 2019, the poorest 20% of Pakistani households have seen their real monthly incomes plunge by nearly 12%. In contrast, the wealthiest quintile enjoyed a 7% increase, which may not seem high till we consider that they were making all that money when the economy was in freefall, average wages outside the public sector were declining, and poverty shot up. This divergence is not an anomaly but the defining feature of our current trajectory. Savings have been nearly wiped out for most, collapsing by 66% overall, as families deplete their reserves just to afford essentials. Consequently, spending on health and education has fallen by a staggering 19%, which does not bode well for the future.

Another problem is that the government is actively feeding 'paper growth' sectors that may bring some GDP growth, but do not stimulate commercial investment, most notably real estate, where the rich park their wealth and let it grow, instead of investing it in areas that generate high-paying jobs. The result is an economy where luxury car sales and the stock market are at record highs, while demand for cement and mass-market goods is languishing. A society this divided is unsustainable, as a sustainable economy depends on people's living conditions genuinely and steadily improving till no one is poor anymore.