Pakistan has 18th largest ‘middle class’ in the world: report

Published: October 16, 2015
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PHOTO: FILE

PHOTO: FILE

KARACHI: 

Pakistan’s middle class consists of over 6.27 million people, according to Credit Suisse, a global financial services company.

In its Global Wealth Report 2015 released on Oct 13, Credit Suisse said Pakistan has the 18th largest middle class worldwide.

The study revealed that 14% of world adults constituted the middle class in 2015 and held 32% of world wealth. The share of middle-class adults in Pakistan’s total adult population of 111 million was 5.7% in 2015 as opposed to India’s 3% and Australia’s 66% in 2015.

Middle-class Pakistani adults constituted 0.9% of the worldwide middle-class population. The highest concentration of middle-class population in 2015 was in China (108.7 million), followed by the United States (91.8 million) and Japan (62 million).

Read: Disproportionately: Taxation system not anti-poor but anti-middle class

Defining ‘middle class’

Economists use a variety of methods, such as income and standard of living, to define what constitutes the middle class. Credit Suisse uses the measure of ‘personal wealth’ – or a ‘wealth band’ instead of an ‘income range’ – to determine the size and wealth of the middle class around the world.

Taking the United States as the benchmark country, Credit Suisse considers an adult to be part of the middle class if they have wealth between $50,000 and $500,000 valued at mid-2015 prices.

Credit Suisse came up with the minimum and maximum figures for the US middle-class wealth band based on its median earnings and the amount of capital a person close to retirement age needs to purchase an annuity paying the median wage for the remainder of their life.

Read: Chinese middle class now the world’s largest

For the rest of the countries, Credit Suisse uses the IMF series of Purchasing Power Parity (PPP) values to derive equivalent middle-class wealth bounds in local terms.

Being a lower per-capita country, Pakistan has lower prices and consequently a reduced middle-class threshold. To be a member of the middle class in 2015, according to Credit Suisse, a Pakistani adult must have wealth of at least $14,413.

In terms of the local currency that buys one dollar for Rs104 these days, a Pakistani adult should be considered part of the middle class if they have wealth of between Rs1.5 million and Rs15 million.

With $14,413, Pakistan has the third lowest “middle-class lower bound wealth” for 2015, followed by India ($13,662) and Ukraine ($11,258). This suggests Pakistan has lower prices in general, which enables people to join the middle class by crossing a relatively lower threshold of wealth band.

Read: Minding middle class aspirations

Wealth in Pakistan

According to Credit Suisse, total wealth in Pakistan amounted to $495 billion in 2015. Given that the figure stood at $170 billion in 2000, total wealth in Pakistan has increased at an annualised rate of 7.4% for the last 15 years.

Total wealth of the world increased on average by 5.2% annually over the same 15-year period, the report shows.

A little more than 90% Pakistani adults had wealth less than $10,000 in 2015. The share of Pakistani adults with wealth between $10,000 and $100,000 in 2015 was 9.8% while only 0.1% adults owned wealth in the range of $100,000 and $1 million, the report revealed.

Published in The Express Tribune, October 16th, 2015.

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Reader Comments (13)

  • Nav
    Oct 16, 2015 - 10:35AM

    What is the percentage of overall population? Why only middle class, why not wealthy? What is the position in wealthy?Recommend

  • Mrs HighBall
    Oct 16, 2015 - 11:02AM

    Wow ! The way we’re going, we will soon be a member of BRICS. But how would the acronym go then ? SPRICB ??Recommend

  • Zain USA
    Oct 16, 2015 - 12:14PM

    While rest of the article seems accurate, I would question the 0.1% adult population that owns the wealth in access of $100,000 and above. Which translates to roughly 200,000 people only. Owning a House which is paid off, is also considered an asset (Wealth). Islamabad alone might have as many as 100,000 People that own a house that is minimum $100,000. This does not include other assets. If you include all those assets then the figure for adults owning property in access of $100,000 will be much above 200,000 people )0.1% of the population, in a country of 200 million. It may be to close to 1 to 2 million people or 1% to 2% of the adult population. Recommend

  • Aqib Ali Shah
    Oct 16, 2015 - 12:16PM

    It seems, I have failed to fulfill the basic criterion of wealth to fall under the middle class category. Poor me. lol.

    Recommend

  • Ali
    Oct 16, 2015 - 12:52PM

    Interesting Facts– Middle class people

    Pakistani – We have 5.7% that is 5.27 million people

    India – has 3% middle class that makes up of almost 40 million people

    China i- 10% with 108 million people.

    U.S is 91 million

    Japan is 60 MillionRecommend

  • Sirus
    Oct 16, 2015 - 5:57PM

    @Nav:
    Lol! good observation. That drastically changes everything. According to this study, Pakistan has approx. 5 million people who are in the middle class range, add another 1/2 million people based on your presumption and see the huge difference that it makes. In Karachi alone there are about 30 million people, and i am 100 percent sure that more than half a million people own flats/houses worth more than 1 crore i.e $ 100,000. Just consider how many houses/flats there are in D.H.A alone? (at least 50,000 for sure, and this is not even 5 percent of Karachi) Recommend

  • JSM
    Oct 17, 2015 - 7:28AM

    Sir,

    You are a rich country with poor government. Government has no money to execute projects critical in energy sector, health sector, education sector. Your industry – steel production, aviation (PIA), transportation (railways) is failing. People do not pay taxes. Yet you have a large middle class. Great

    ET- Please publish it. It is all facts.Recommend

  • Imdad
    Oct 17, 2015 - 1:14PM

    How did Credit Swiss get the numbers for middle class people having more than $14,413? (by looking into their secret Swiss accounts? ) Everybody knows that less than one percent of Pakistani population files income tax and wealth statements, and about 11 percent of the total population of the country has bank accounts ! Phony surveys! These surveys are always flawed! Recommend

  • Sher
    Oct 17, 2015 - 4:51PM

    Unfortunately its mean 70% pakistan are poor, are failed to come under middle class, $50000 =500000 Rupees is a heavy amount which is usually earned by very rare families in Pakistan.lolRecommend

  • Brar
    Oct 18, 2015 - 4:38AM

    Such surveys can be correct for the countries where every citizen pays income tax not for India and Pakistan where even those having taxable income never pays tax.Recommend

  • Naveed
    Oct 18, 2015 - 10:21AM

    If we have such wealthy middle class, then why Pak’s forex reserve of 17 billion is so low, compared to neighbouring Bangladesh’s 23 billion and India’s 380 billionRecommend

  • JSM
    Oct 18, 2015 - 3:05PM

    @Ali:
    Percentages and numbers do not match.Recommend

  • Gp65
    Nov 3, 2015 - 9:59AM

    @Sirus:
    Interestingly even though Pakistan has 5.7% of their adult population as middle class, only 0.9% pay income tax I. Less than 16% of middle class people pay income tax.
    In India 3% of adult population is middle class 3.5% of total population ( which means an even higher proportion of adult population pays income tax ie more than 120% of middle class adults pay income tax,
    Instead of just competing on weapons, isn’t this something ordinary Pakistanis should try to compete in? Recommend

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