Consumer confidence is always high in the economies where there is justified wealth distribution and there is trickle-down effect of the policies of the government. And it is vice versa otherwise. Spending pattern of the middle class is the driver of economy all over the world. The stark reality is that the middle class individuals across the globe are unnerved in recent times about either the stagnation or the decline in their living conditions due to economic problems prevailing even in the developed world.
Pakistan is no exception in this regard though as a developing rather a poor country, some efforts have been made to ameliorate the living conditions of the downtrodden masses particularly. The matter to be discussed or the thing to be noticed is the ever-declining consumer confidence in an uncertain economy. Lots of individuals may not concur with the poor consumer confidence citing the reasons of property purchase and the sale of luxury products particularly passenger vehicles in the recent times. It must be noticed that high property prices or ever-increasing sale of property or vehicles do not reflect the ground reality in the economy of that of ours where there is widespread income inequality and high level of disparity between those who are well-off and those who are downtrodden. It seems as if consumers in Pakistan were frustrated and aggrieved due to whopping augmentation in the prices of commodities without any check and balance and they do consider that all this is being done at the behest of those who wield power and enormous influence.
Looking at this, one can say that consumer confidence is at low level in Pakistan since it is not the will to purchase but the compulsion to keep body and soul together in the country where prices are increased in cahoots with those who could easily control them. It must be noticed that the economies where the consumer confidence is low, the economic property and the growth are distant dreams.
Consumer confidence can also be gauged by looking at the rampant street protests either for unjustified increase in the prices or the non-availability of the products for the brazen goals of certain individuals who only care for their prosperity at the expense of those who actually are the drivers of the economy.
The world agrees that an individual who earns between $11 and $110 a day represents middle class. Having a glance at this figure, majority of the people would question the credibility of the official data representing the middle class in Pakistan. If a person earning at least Rs 40,000/- per month is a person from middle class, the consumer confidence would be very low in Pakistan reason being that an individual earning at least Rs 40,000/- per month would have no confidence at all since he/she would find it too difficult to keep body and soul together. Does it mean that only earning certain amount is the sheer reason of consumer confidence in an economy? To great extent YES! Let’s agree with the fact that since the economic condition of Pakistan and its major chunk of the population are in tatters, the level of consumer confidence is perhaps at the lowest level in the country. Those who are over-pessimists might think that since there is betterment in the living conditions of many comparatively, the level of consumer confidence has increased in Pakistan. It is evident from the spending patterns of the population that major chunk of spending of the masses is on food items or necessities. If this is the case, the consumer confidence is on the downward trajectory.
Pakistan’s savings-to-GDP ratio was 14.3 percent in 2016-17 and instead of increasing it went down to 13.1 percent in 2017-18 whereas savings-to-GDP ratio in the Asian countries is around 25 percent on average. One of the valid points of views is that the more a nation saves, the higher is the confidence level of the consumers whereas the general point of view prevailing in Pakistan is this that saving is low for two reasons in Pakistan: uncertainty in prices and nothing to spare due to inflationary pressures. This speaks volumes for the rising income inequality in Pakistan and poor system of wealth distribution. There has always been a hue and cry in Pakistan that only a few families have billions whereas the majority lives in squalid conditions experiencing hunger and income injustice.
It is a point to be noticed that a country where a few families amass wealth can never have high level of consumer confidence since it comes with certainty, equality and consistent earning patterns. The policy rate is 6.25 percent, which may be considered ideal for enabling business environment whereas it is contrary since the economic growth has not been impressive and employment generation has been sluggish killing the consumer confidence.
Real estate sector of Pakistan is said to be a vibrant sector and it is believed that over $5 billion are spent on construction in a year. It is a mind boggling amount. Bike, three-wheeler and car sales are on the rise in Pakistan however it may not be indicative of real consumer confidence since the overall economic situation is gloomy and particularly the 15 percent depreciation of the local currency during last seven months has eroded the consumer confidence to the level beyond repair.