Pakistan's Middle Class Consumer Population Among World's Fastest Growing

Although the rate of growth has slowed since 2018, Pakistan's middle class consumer population still remains among the fastest growing in the world. In a report titled "Emerging Markets Transforming As Velocity Markets", Ogilvy and Mather, a global market communications firm, has put Pakistan among what it calls "Velocity 12" group of economies that include Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Myanmar, Nigeria, Pakistan, Philippines and Vietnam.  The term velocity describes both the rate of real change in the size of the middle class as well as a priority for companies as they consider business investment and marketing in V12 countries. These 12 countries will be the biggest contributors to the next billion middle class consumers, according to the report.

The Velocity 12 report says that this next billion middle-class group will:

1. Be increasingly defined by women and youth as the change agents, with purchasing power crossing cultural, religious and demographic divides.

2. Comprise the largest block of newly connected consumers on the internet, globally connected as never before – with global connectivity that is projected to double in the next five years.

3. Rapidly increase its social engagement, and brands discussion, as marketers compete in the digital marketplace for greater share of the new middle-class prize.

4. Urbanize faster than other parts of the world, dominating the future list of megacities, while creating a new “urbangea” that connects large swathes of these countries into a virtual trading zone.

5. Propel cities, more than countries, to become the unit of invention, entrepreneurship and investment.

Growth in Middle Class Consumers 2015-25. Source: Ogilvy and Mather

Velocity 12:

Ogilvy and Mather's report on "Velocity 12" begins with the story of Fahima Sarkar, a Pakistani woman entrepreneur who lives in Lahore. Here is an excerpt:

"If you want to catch a glimpse of the global economic future, then meet Fahima Sarkar. In many ways, Fahima – who lives in Lahore, Pakistan – is typical of her group of friends, and a growing number of women across South Asia. After attending college, Fahima worked in sales for a Karachi-based garment company that was rapidly expanding their business in the region. She eventually left the role because she wanted to start a family. Fahima is a lot different than her own mother – both in her outlook and her lifestyle. Rather than being solely a stay at home mom, Fahima has used her time raising her child to develop a new career as an “Instapreneur,” someone who uses social media to start her own business. Her online venture (headquartered on her kitchen table): selling high-end picture frames via the Web to parents who want an upscale way to display their children’s photos at home. That was her first taste of entrepreneurship – and she turned a profit almost immediately."

"Velocity 12" report forecasts Pakistan's middle class consumer population to reach 122 million by 2025, representing a gain of 59 million members over a 10 year period from 2015 to 2025.

Reality Check:

We are almost half way through Ogilvy's 10 year forecast period. How is Pakistan doing? One indicator is the growth in vehicle ownership, particular the ownership of motorcycles.

Vehicle Ownership in Pakistan. Source: PBS

Private vehicle ownership in Pakistan has risen sharply in 4 year period from 2015 to 2016. More than 9% of households owned cars in 2018, up from 6% in 2015. Motorcycle ownership has jumped from 41% of households in 2015 to 53% in 2018, according to data released by Federal Bureau of Statistics (FBS) recently. There are 32.2 million households in Pakistan, according to 2017 Census.

As of 2015, almost all of South Asia's poor were in two countries: Bangladesh (3% of global poor) and India (24% of global poor). Of the world’s 736 million extreme poor in 2015, 368 million—half of the total—lived in just 5 countries. The 5 countries with the highest number of extreme poor are (in descending order): India, Nigeria, Democratic Republic of Congo, Ethiopia, and Bangladesh, according to the World Bank

World's Poor Population Distribution. Source: World Bank

Retail Sales in Pakistan. Source:

Retail Sales Growth:

Pakistan has seen retail sales climb from $145 billion in 2015 to $210 billion in 2018, according to Over 60 percent of the Pakistani population is between the aged of 15 to 64 years, which is the prime age of consumer spending.

With the introduction of 3G/4G services, internet penetration has risen rapidly. Internet subscriber growth in Pakistan is averaging over 22% per year and total subscribers crossed the 70 million mark in 2019. Cheap smartphones, low cost of 3G/4G services and a consumer-goods obsessed middle class has meant that Pakistan’s e-commerce sector is “mobile first”: some e-commerce start-ups claim that over 75 percent of their total business is online.


Online sales are growing much faster than the brick-and-mortar retail sales. Adam Dawood of Yayvo online portal estimates that e-tail sales are doubling every year. He expects them to pass $1 billion in the current fiscal year (2017-18), two years earlier than the previous forecast. This is being enabled by increasing broadband penetration and new online payment options. Ant Financial, an Alibaba subsidiary, has just announced the purchase of 45% stake in Pakistan-based Telenor Microfinance Bank. Bloomberg is reporting that Alibaba is in serious talks to buy, an online retailer in Pakistan.

Advertising Revenue:

Growing buying power of rapidly expanding middle class in Pakistan drove the nation's media advertising revenue up 14% to a record Rs. 76.2 billion ($727 million), making the country's media market among the world's fastest growing for FY 2015-16, according to Magna Research.  Half of this ad spending (Rs. 38 billion or $362 million) went to television channels while the rest was divided among print, outdoor, radio and digital media. `

Digital media spending rose 27% in 2015-16 over prior year, the fastest of all the media platforms. It was followed by 20% increase in radio, 13% in television, 12% in print and 6% in outdoor advertising, according to data published by Aurora media market research

Mass Media Growth:

Advertising revenue has fueled media boom in Pakistan since early 2000s when Pakistan had just one television channel, according to the UK's Prospect Magazine. Today it has over 100. This boom has transformed the nation. The birth of privately owned commercial media has been enabled by the Musharraf-era deregulation, and funded by the tremendous growth in revenue from advertising targeted at the burgeoning urban middle class consumers.

Sports and Entertainment:

Sports and entertainment sectors are major beneficiaries of increasing advertising budgets. Commercial television channels' shows and serials are supported by advertisers. A quick look at Pakistan Super League 2018 matches reveals that all major consumer brand names are either directly sponsoring or buying advertising from broadcasters.  These ads and sponsorship have turned PSL into a major business producing tens of millions of dollars in revenue to support cricket in Pakistan.  Last year, Pakistan Cricket Board's budget was over $40 million and a big chunk of it came from PSL. This year, the PSL chairman Najam Sethi estimates the PSL franchise valuation is approaching half a billion US dollars with potentially significant revenue upside.

Downsides of Consumer Boom:

There are a couple of downsides of the consumer boom. First,  a dramatic increase in solid waste. Second, rising consumption could further depress Pakistan's already low private savings rate.

FMCG products come with a significant amount of plastic and paper packaging that contribute to larger volume of trash. This will necessitate a more modern approach to solid waste disposal and recycling in Pakistani towns and cities. An absence of these systems will make the garbage situation much worse. It will pose increased environmental hazards.

Pakistan's savings rate is already in teens, making it among the lowest in the world. Further decline could hurt investments necessary for faster economic growth.


Pakistan's $210 billion retail market is among the fastest growing in the world, according to Euromonitor.  In a report titled "Emerging Markets Transforming As Velocity Markets", Ogilvy and Mather, a global market communications firm, has put Pakistan among what it calls "Velocity 12" that include Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Myanmar, Nigeria, Pakistan, Philippines and Vietnam. These 12 countries will be the biggest contributors to the next billion middle class consumers, according to the report. Expanding middle class, particularly millennials with rising disposable incomes, is demanding branded and packaged consumer goods ranging from personal and baby care items to food and beverage products. Strong demand for fast moving consumer goods is drawing large new investments of hundreds of millions of dollars.  Rapid growth in sales of consumer products and services is driving other sectors, including retail, e-commerce, paper and packaging, advertising, media, sports and entertainment. Potential downsides of soaring consumption include increased amount of  solid waste and decline in domestic savings and investment rates.

Related Links:

Haq's Musings

South Asia Investor Review

FMCG Boom in Pakistan

Pakistan Retail Sales Growth

Advertising Revenue in Pakistan

Pakistan FMCG Market

The Other 99% of Pakistan Story

PSL Cricket League Revenue

E-Commerce in Pakistan

Fintech Revolution in Pakistan

Mobile Broadband Speed in Pakistan

Riaz Haq's YouTube Channel

PakAlumni Social Network

Views: 46

Comment by Riaz Haq on January 17, 2020 at 10:44am

Economist Akbar Zaidi: "With an 18 per cent #GDP, #Pakistan is no longer an #agriculture #economy....Places have become more accessible with people coming closer thanks to #telecommunications, #media" #socialmedia affecting lives..#women better educated.

He said that it points towards the changes in Pakistan’s economy while looking at various indicators such as rural and urban life, employment, sources of income, people, their potential, etc. “With an 18 per cent GDP, Pakistan is no longer an agriculture economy,” he pointed out before talking about employment and what changes have taken place there along with the source of income of people in rural and urban areas.

“Places have become more accessible with people coming closer thanks to telecommunications, media, etc. Things are becoming interlinked,” he said. He also spoke about how social media was affecting lives here and how more women stepping out of their homes and getting good education were contributing to the feminist economy.


Prof Dr Riaz Shaikh, dean, Faculty of Social Science and Education Department at Szabist...“We have been missing the politics of urbanisation,” he said. “Urban politics has now captured Karachi’s politics which is based on the struggle of classes and from class politics it is moving to sectarian politics,” he said wondering if this is now an overdeveloped state using biopolitics as a tool to marginalise certain people such as the ‘missing persons’.

He also spoke of the role of the media and journalists, how freedom of speech and expression were curtailed etc. “But after 2007, the media here has played an important role in teaching a lot to the Pakistani establishment though now there is also a business content emerging within the media as a result missing many things in the national discourse because the media doesn’t want a hostile response from the government,” he said.


Senior journalist Khurram Husain, meanwhile, spoke about how it has become evident about who really represents the state from the recent meeting of the army chief with the business community. “The businessmen were complaining about taxes and saying that the structural change was killing them but the government is not backing down. They are told that they were willing to listen to them and help them but within certain limits or constraints,” he said, reminding also about the mini-budget of early last year which was to serve as a revenue exercise though the billionaires were still having their way during it all at least until former finance minister Asad Umar left and the state got its voice. “Class in Pakistan operates at some points and not at others as class is heavily fragmented,” he said.

Comment by Riaz Haq on January 17, 2020 at 4:23pm

#Pakistan foreign direct investment (#FDI) jumps 68.3% to $1.34 billion in 1H of FY20 over $796.8 million in 1H of FY19. Major chunk of these #investments went to #telecom, #power and #electrical #machinery sectors. Biggest investors: #China and #Norway

The SBP figures showed surprise addition of Malta which invested $111.1m during the July-December period of 2019-20.

The jump in the cumulative FDI numbers came following a one-off payment made by the telecommunication companies — Telenor, Warid and Zong — for licence renewal.

On the flipside, data for December 2019 showed total foreign investment bottom-line outflow of $198.3m. Although the FDI increased by 52.6pc to $487m in the month and $684m outflow in the debt securities – bonds, T-bills and PIBs — closed the total investment account in negative.

Sector-wise, the net FDI in the telecommunication sector rose to $432m during the first six months of FY20 compared to a net outflow of $126.3m in the corresponding period last year.

In addition to telecoms, inflows in the power sector also went up by 41.6pc to $289.7m compared to $204m. More than half of these investments — $153m — were in the coal-based power plants.

However, the foreign investments in the financial business fell to $162.1m during July-December period compared to $202.2m in the same period last year.

The SBP data showed that the foreign public investment in the government debt papers ie T-bills rose to $452.2m during the first six months of this fiscal year pushing up the total foreign investment to $1.811bn from $377m in the same period last year.

Country-wise, China retained its top position with total investment including direct and portfolio of $422.3m. Inflows from China have cooled down over the last few quarters following the completion of early-harvest China-Pakistan Economic Corridor projects.

The data further showed Norway as the second leading investor in the country pouring $288.5m during the period under review. The tally includes licence renewal fee paid by the Norwegian telecom firm and injection of $70m capital in Telenor Microfinance Bank.

SBP reserves rise

The foreign exchange reserves held by the State Bank of Pakistan increased by $82.30m to $11.586bn during the week ended Jan 10. The central bank reserves are currently at their 21-month high.

The weekly report issued by the central bank showed reserves held by commercial banks fell by $43.5m to $6.537bn.

The country’s total reserves rose by $38.8m to $18.123bn.

Comment by Riaz Haq on January 17, 2020 at 4:25pm

$536 million invested in rupee denominated #Pakistan government #bonds yesterday and $2.2 billion in 4 months. Western investors piling in to take advantage of high interest rates by Pak government. #Investment

Comment by Riaz Haq on January 26, 2020 at 11:04am

Based on the numbers provided by the now defunct Pakistan Medical and Dental Council (PMDC), as of 2018, Pakistan had about 190,000 non-specialist doctors and another 46,000 specialists. However, there was no breakdown into different specialties.

Looking at the numbers for Pakistan a bit more closely, the Punjab has 83,000 doctors while Sindh has 66,000 doctors. Sindh has less than half the population of the Punjab and almost three fourths the number of doctors as in the Punjab, but nobody I know will insist that medical care in Sindh is better than that in the Punjab because it has more doctors per thousand people.

Coming to the Punjab, reports suggest that there are as many as 40,000 non-formal medical practitioners (quacks) and a lot more practising alternative medicine like homeopathy, traditional Greek medicine (hakeems) and others such. The reason why these non-formal medical providers exist is simply because regular physicians are either not available or are too expensive for the poorest segments of society.

Comment by Riaz Haq on January 29, 2020 at 10:43pm

'Never seen it this bad': #India faces tough growth challenges. With India's #economic growth at its slowest in 11 years, #Modi government's options in its upcoming budget appear limited. #Hindutva #BJP #CAA #NRC #economy @AJENews

SK Jain has seen many economic ups and downs in the decades he has been running his car parts company in a satellite city on the outskirts of the Indian capital, New Delhi. But these are exceptionally bad times, he says.

"In the past things would move by hook or by crook, but nothing is moving at all now," Jain told Al Jazeera. "We've been in this business for 30 years and I've never seen it this bad."

Once the world's fastest-growing major economy, growth in India has skidded in recent months, creating a serious challenge for the government as it gets ready to present its annual economic report and its budget for the financial year starting April.

For the three months ending September, the country's economy grew by 4.5 percent, according to the latest official data. That was its slowest pace in more than five years, and significantly slower than the 7 percent clip it clocked up in the same period a year earlier.

The main reason for the slowdown was a drop in private investment and consumption.

Part of the blame for the deceleration lies in factors beyond the government's control, including a global slowdown brought about by a trade war between the United States and China and tensions in the Middle East that have driven India's imported energy bill higher.

But it has also been exacerbated by some poorly calculated economic reforms that could have been avoided.

And the outlook for people like Jain and others in India appears to be gloomy.

The government recently projected economic growth of 5 percent for the current financial year, down from 6.8 percent last year, which would make it the slowest pace in 11 years.

Without the economy growing at a healthy clip, everything - from government revenues to individual incomes - is being adversely affected, analysts say.

'Demand has collapsed'
"What we are witnessing now is a new phenomenon," Sunil Sinha, principal economist at India Ratings, a Fitch unit, told Al Jazeera. "Demand has collapsed. We've never had this before. Under such situations, policy-making is tricky," he said, as the government has few resources to boost the economy. "Its options are very limited," he added.

The slowdown can be traced back to controversial flagship reforms by Prime Minister Narendra Modi'sgovernment implemented in the past few years.

These included a sudden clampdown in November 2016 on more than 80 percent of the currency in circulation in a bid to crack down on illegal activities. That was followed by a significant sales tax overhaul the following summer that created confusion and compliance burdens for many small companies, leading to a drop in business activity.

This, along with a government decision to not increase the minimum price it pays farmers for their produce, hit incomes in both urban and rural areas, curbing the spending power of many people.

In a November 14 note, Anthony Nafte, senior economist at Hong Kong-based capital markets and investment group CLSA, warned that the Indian economy was now in a form of "recession", the kind in which banks prioritise protecting their capital bases rather than making new loans.

Meanwhile, companies and households are prioritising the repayment of loans rather than taking out new borrowings for investment and expansion, he said.

Government data released in December shows that 18 out of the 23 industry groups in the manufacturing sector experienced negative growth during the month of October 2019 as compared with the same period last year. Of those, 10 saw a double-digit dip and the electricity sector saw a record contraction of 12.2 percent, the third consecutive month it had shrunk.

Comment by Riaz Haq on February 7, 2020 at 8:00am

Overseas Investors Chamber of Commerce and Industry (OICCI) Survey: Foreign investors see growth potential in #Pakistan. 75% of respondents indicating willingness to recommend new #FDI in Pakistan to their parent companies. #investment

OICCI President Shazad Dada said the survey showed that on a number of business climate parameters foreign investors remained positive and were upbeat on the performance of their respective business entities in Pakistan, with 75pc of the respondents indicating willingness to recommend new FDI in Pakistan to their parent companies.

He said the foreign investors participating in the survey though showed concerns with some areas of doing business, yet the case for business growth potential and opportunities in Pakistan was supported by over 7 out of 10 respondents indicating their plans to invest more or similar amounts over the next 1 to 5 years.

Majority satisfied with business performance

The respondents said compared to the previous 2017 survey, the federal government was better engaged with stakeholders on policy issues and its senior functionaries appear to have better understanding, and commitment to resolve investors issues.

A number of economic disciplinary measures announced by the government last year, like the partial withdrawal of incentives on new investments affected

OICCI members, said Mr Dada adding the strong resistance, especially from a large segment of the market players in the informal economy, towards many bold measures to document the economy had negative impact on the business operation of many of OICCI members.

“Delayed action on some other key concerns, like inter-provincial coordination issues, matters relating the renewal of cellular mobile operators’ licences, extended time in processing corporate remittances, and capacity issues in some of the regulatory bodies have been raised as concerns for many businesses”, the statement said, adding nearly 30pc devaluation of the rupee, increase in the central bank’s discount rate from 6.5pc in July 2018 to 13.25pc in third quarter 2019 led to an increase in the cost of doing business.

The foreign investors expressed concern that two key issues including the overdue tax refunds of around Rs80bn and the energy sector’s circular debt remained largely unresolved.

“This challenging business environment is duly reflected in the feedback as the foreign investor’s perspective of doing business has seen a major decline in the 2019 survey as compared to the last 2017 survey”, Dada said.

More than 70pc of the foreign investors were partially satisfied with “Policy framework” relating to business but have concerns on the implementation of policies. More than half of the respondents were concerned on the consistency and predictability of monetary and fiscal policies.

When asked to name top five key pain points to their business , the CEOs of OICCI membership identified, in order of priority, rupee devaluation, gap between policies and their effective implementation, increasing tax burden, cost of doing business and increase in borrowing cost/interest rates.

A number of companies belonging to the fast moving consumer goods (FMCG), food and healthcare sectors have identified counterfeiting, illegal imports and dumping of cheaper imported products as major risks to their businesses.

Commenting on the key pain points, the OICCI president said a noteworthy feedback from the 2019 survey was the deletion of security as one of the top five challenges.

Comment by Riaz Haq on Wednesday

Lower #oil price is good news for #Pakistan #economy. It will reduce current account deficit and ease inflationary pressure and monetary easing. #CoronavirusOutbreak #China #energy

As the number of coronavirus cases rose outside China, oil slid more than five per cent at its session low on Monday, falling into bear market territory, amidst fear regarding a slowdown in the global economy.

With the virus still present in China- the world largest importer and consumer of oil- and dampened oil demand, WTI, Brent and Arab light went down by 15.8pc, 16.3pc and 14.5pc respectively in the last two months or so.

As the situation is getting worse with the outbreak spreading across South Korea, Italy, Iran, Afghanistan, and Israel, the Organisation of the Oil Exporting Countries (OPEC) has lowered its oil demand by 230,000 bpd, while the US Energy Information Administration revised down its forecast regarding global oil demand by 378,000 bpd.

With all eyes on the OPEC+, Adnan Sheikh AVP Research at Pak Kuwait Investment Management Company said, “OPEC may have underestimated the impact of coronavirus in their initial estimates of reduction in demand by 230k bpd for 2020. Given that both IEA and IEA have estimated much larger numbers, we will have to wait and see how OPEC+ responds in terms of additional cuts”

Until last week, crude oil prices received support over expectations that OPEC and its allies could implement further supply cuts when they meet in early March. However there is an air of uncertainty regarding Russia agreeing to such a plan.

In a report on Coronavirus’ impact on oil prices, Tahir Abbas from Arif Habib Limited said, “We believe oil prices in the short term will be dependent on the virus updates from China including new registered cases and death tolls. Moreover, the spread of the virus to other countries and measures for combat are also expected to influence oil prices.”


As per the report, lower oil prices bear positive news for the macro-economy as it will lead to lower inflationary pressure and may result in monetary easing.

Abbas further quantifies that for every $5/bbl decrease in oil price, our base case inflation (11.6pc for FY20) will be contained by 23 bps. As for global policy rates, decline in oil prices holds the potential to push for a wave of monetary easing which could be seen as positive for Pakistan as it could raise Eurobond and Sukuks from the international markets.

As for trade, Abbas says for every $5/bbl downward movement in oil prices, there will be an annualized impact of around $1.1 billion on Pakistani imports, which may lead to further reduction in current account deficit (CAD).

KASB Securities Managing Director Arsalan Soomro said Pakistan imported $14 billion worth of energy imports and that a $10 decline would lead to $2-2.5bn/saving per year. “Thus it gives cushion to your currency and improves your foreign exchange reserves.”

As per Hamza Kamal, an analyst at AKD Securities, “The government may also take this opportunity to jack up revenue from petroleum as done in the past in 2015-2016s.”


The downward movement in oil prices is being seen as negative for the exploration and production (E&P) sector.

Tahir Abbas says the earnings of local E&P companies would be hit between 2 to 7pc on an annualized basis. “Oil marketing companies are likely to witness a one-time inventory loss, while refineries are likely to witness inventory losses which may be offset by an increase in margins owing to the possibility of crude oil prices declining more than final product prices.”

Hamza Kamal added that from industrial perspective, many captive power plants had shifted from gas to furnace oil (FO) recently. “If oil price continues to remain under pressure, power production by these plants on FO would become more attractive.”


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