Credit Suisse: Pakistan's Wealth Inequality is the Lowest in South Asia

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Wealth Inequality:

Inequality is measured in terms of Gini index. It ranges from 0% for perfect equality (when everyone has the same wealth)  to 100% for total inequality (when all of the wealth is owned by one person).  On this scale, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, China’s 78.9% and India's 83%.

Data Source: Credit Suisse Graph: Counterview

Household Wealth:

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976

Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)

Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

Ownership of Appliances and Vehicles: 

Growing household wealth in developing nations like India and Pakistan is reflected in  ownership of consumer durables like computers, home appliances and vehicles. This data is sourced from periodic household surveys like NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL

India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL

Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Summary:

Credit Suisse wealth data for 2017 shows that Pakistan has the lowest wealth inequality in its region as measured by Gini index. Lower inequality can be seen in terms of rising percentage of households that can afford to buy durables like appliances and vehicles as reported by Dr. Abdul Ghani of Karachi School of Business and Leadership (KSBL).

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Views: 531

Comment by Riaz Haq on November 30, 2017 at 7:55am

#Broadband subscribers including #3G, #4G cross 49 million in #Pakistan. #Internet #Mobile https://dnd.com.pk/broadband-subscribers-including-3g-4g-cross-49-m... … via @Dispatch News Desk



The total broadband subscribers including 3G and 4G services have crossed around 49 million in the Country till October this year, registering a reasonable growth rate with each passing month.

As per latest figures issued by Pakistan Telecommunication Authority (PTA), of the total number of broadband users, major contribution has been made in shape of 3G and 4G subscribers by Mobile Phone Operators which reached 46 million by October 2017.

The number of broadband subscribers in other technologies included DSL 1,550050, HFC 51,715, Wimax 151,330, FTTH 54,107 and EvDO 55,8,740. The tele-density of total broadband has reached 22.6 per cent while 3G and 4G tele-density of the total subscriber base crossed 21.6 per cent.

Experts of telecom industry are having a viewpoint that portable mobile broadband devices like MiFi and Wingles are one of the main reasons of this growth in 3G/4G subscribers and many more will follow this trend in upcoming days.

Meanwhile, Country’s largest mobile phone operator, Mobilink has overtaken its competitors as 3G/4G player after official figures were released by PTA. Jazz subscribers base was 13.94 million 3G and 1.56 million 4G till the period mentioned.

A senior official of the Company said key to this leading position is consistent investment to further innovate on behalf of subscribers by delivering not just the best 3G/4G and voice network, but also improvements in customer service, and product lines.

As per statistics, the 3G subscribers of Zong have now extended to 8.99 million and 4.78 4G users by end of October 2017. The number of Telenor 3G subscribers was 10.64 million and 1.16 4G users till the period mentioned above.


An increase has also been observed in Ufone subscribers base, reaching 5.45 till the period from 5.3 million 3G users by August 2017.

Meanwhile, the mobile broadband is helping in widespread adoption of social media which has an impact on everyday lives of billions of people around the world.

Social media has also been gaining vast popularity among masses in Pakistan. The introduction of mobile broadband coupled with influx of affordable Smartphones had a catalytic effect on use of social media.

People turn towards social media to voice their opinions, experiences, suggestions and feedback on any topic or constituent of the society.

http://www.pta.gov.pk/en/telecom-indicators

Comment by Riaz Haq on December 2, 2017 at 5:46pm

#Pakistan's bottom quintile #income share has increased from 8.1% to 9.6% since 1990. It is the highest in #Asia, #world, according to UNESCAP Statistical Yearbook. #inequality http://www.unescap.org/sites/default/files/SYB2015_Full_Publication...

Although more people in China have
lifted themselves out of poverty than any other
country in the world, the poorest quintile in that
country now accounts for a lower percentage
of total income (4.7 per cent) than in the early
1990s (8.0 per cent). The same unfortunate
trend is observed for a number of other
countries, including in Indonesia (from 9.4 per
cent to 7.6) and in the Lao People’s Democratic
Republic (from 9.3 per cent to 7.6).

In a number of other countries, people in the
poorest income quintile have increased their
share of total income including in Kyrgyzstan
(from 2.5 per cent to 7.7), the Russian Federation
(4.4 per cent to 6.5), Kazakhstan (7.5 per cent to
9.5) and Pakistan (8.1 per cent to 9.6).

Comment by Riaz Haq on December 2, 2017 at 8:01pm

Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.

First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.

http://www.riazhaq.com/2016/11/world-bank-reports-big-jump-in-livin... 

Comment by Riaz Haq on January 22, 2018 at 7:17am

India's Richest 1% Cornered 73% Of Wealth Generated Last Year: Oxfam Survey
Besides, 67 crore Indians comprising the population's poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam.

https://www.ndtv.com/india-news/indias-richest-1-corner-73-of-wealt...



Besides, 67 crore Indians comprising the population's poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam hours before the start of the annual congregation of the rich and powerful from across the world in this resort town.

The situation appears even grimmer globally, where 82 per cent of the wealth generated last year worldwide went to the 1 per cent, while 3.7 billion people that account for the poorest half of population saw no increase in their wealth.

The annual Oxfam survey is keenly watched and is discussed in detail at the World Economic Forum Annual Meeting where rising income and gender inequality is among the key talking points for the world leaders.

Last year's survey had showed that India's richest 1 per cent held a huge 58 per cent of the country's total wealth higher than the global figure of about 50 per cent.

This year's survey also showed that the wealth of India's richest 1 per cent increased by over Rs. 20.9 lakh crore during 2017 -- an amount equivalent to total budget of the central government in 2017-18, Oxfam India said.

The report titled 'Reward Work, Not Wealth', Oxfam said, reveals how the global economy enables wealthy elite to accumulate vast wealth even as hundreds of millions of people struggle to survive on poverty pay.
"2017 saw an unprecedented increase in the number of billionaires, at a rate of one every two days. Billionaire wealth has risen by an average of 13 per cent a year since 2010 -- six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2 per cent," it said.

In India, it will take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment firm earns in a year, the study found.

In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year, it added.

Citing results of the global survey of 120,000 people surveyed in 10 countries, Oxfam said it demonstrates a groundswell of support for action on inequality and nearly two-thirds of all respondents think the gap between the rich and the poor needs to be urgently addressed.

With Prime Minister Narendra Modi attending the WEF meeting in Davos, Oxfam India urged the Indian government to ensure that the country's economy works for everyone and not just the fortunate few.


It asked the government to promote inclusive growth by encouraging labour-intensive sectors that will create more jobs; investing in agriculture; and effectively implementing the social protection schemes that exist.

Oxfam also sought sealing of the "leaking wealth bucket" by taking stringent measures against tax evasion and avoidance, imposing higher tax on super-rich and removing corporate tax breaks.

The survey respondents in countries like the US, UK and India also favoured 60 per cent pay cut for CEOs.

The key factors driving up rewards for shareholders and corporate bosses at the expense of workers' pay and conditions, Oxfam said, include erosion of workers' rights; excessive influence of big business over government policymaking; and the relentless corporate drive to minimise costs in order to maximise returns to shareholders.

About India, it said the country added 17 new billionaires last year, taking the total number to 101. The Indian billionaires' wealth increased to over Rs. 20.7 lakh crore -- increasing during last year by Rs. 4.89 lakh crore, an amount sufficient to finance 85 per cent of the all states' budget on health and education.

Comment by Riaz Haq on November 11, 2019 at 9:24pm

Credit Suisse Wealth Report 2019

India Average Per Adult $2,127 Pakistan Average Per Adult $1,168

India Median Per Adult $596 Pakistan Median Per Adult $506.

https://www.credit-suisse.com/about-us/en/reports-research/global-w...

Pakistan's wealth declined mainly because its currency devalued by 24% and its market cap dropped by 42%.


Much of the year-on-year variation in wealth levels is due to changes in asset prices and exchange rates. Exchange-rate fluctuations are frequently the source of the biggest gains and losses. However, exchange rates have been relatively stable over the past 12 months. Among the countries reported in Figure 3 (G7 countries plus China, India and Russia), the largest changes affected China and the United Kingdom – both depreciating about 3.5% versus the US dollar. Currency falls were modest elsewhere in the world, except for Turkey (–21%), Pakistan (–24%) and Argentina (–32%). Currency appreciation was even rarer, with Thailand (+8%) and Egypt (+7%) recording the biggest gains.


Equity prices showed greater regional fluctuations. Market capitalization rose in North America, but declined in much of Europe by an average of about 10%. Markets rose significantly in Russia (+15%), and by an even greater extent in Kuwait (+25%), Brazil (+35%) and Romania (+36%). In Pakistan, market capitalization dropped by 42%, compounding the impact of exchange rate losses.

Comment by Riaz Haq on January 20, 2020 at 8:52pm

Credit Suisse Wealth Report 2019 Pakistan

https://www.credit-suisse.com/about-us/en/reports-research/global-w...

Average Wealth Per Adult  $4,098

Total Wealth  $466 billion 

Comment by Riaz Haq on November 12, 2020 at 7:05pm

India’s middle-class households are culling their armies of domestic helpers amid the Covid-19 pandemic, eliminating a crucial source of jobs and spurring an appliance-buying binge.


https://www.wsj.com/articles/covid-19-spurs-indians-to-replace-thei...

Ila Rallan used to have five different home assistants troop through her apartment in Mumbai every day: one cook, three cleaners and one nanny. At the beginning of India’s lockdown, they all returned to their villages. Additionally, her building wouldn’t let in outsiders.

For the first time in her life, she had to do everything around the house without the help of staff.

Other countries have seen a surge in home-improvement spending by people stuck at home. In the U.S., it has led to shortages in refrigerators, kitchen mixers and washing machines. In India, however, this spending is putting people out of work.

Sarita, a maid and cook in Delhi who goes by one name, had worked for the same family for 10 years. When Covid-19 hit, they reduced her salary for two months and then laid her off, even as the lockdown lifted. They were scared to let her into the house. Her former boss now has machines to do the dishes and clean the floor, she says.

“This disease has gone after our jobs as well as our health,” she said. “Machines are replacing humans and walking away with our salaries.”

India has one of the worst coronavirus outbreaks in the world. With more than 8.5 million recorded infections in the South Asian nation, only the U.S. has reported more cases. The country went into the world’s largest lockdown in March and stayed shut for two months. It has since been gradually opening, but people are still restricting their own movements.

The more-affluent families of the country’s middle class have emerged from this forced hibernation more cautious, more independent and more likely to spend on labor-saving equipment they didn’t think they needed before.

Comment by Riaz Haq on November 12, 2020 at 9:29pm

#Pakistan: Pak Elektron’s profits soar. Home #appliance sales to grow 20% in Fiscal 2021. #Refrigerator sales have grown 12% a year over last 3 years. #AirConditioner sales have shown a 5-year CAGR of 64% #middleclass #urbanization Profit by Pakistan Today https://profit.pakistantoday.com.pk/2020/08/01/as-temperatures-soar...


First, let us look at appliances. Overall, this segment has done very well: between 2015 and 2018, the division recorded an annual growth of 18%. However, in the last one year, appliance sales were somewhat subdued. The imposition of an CNIC condition on business to business transactions impacted the market, and the Covid-19 related lockdown for between March and May in 2020 did not help (who will buy a new deep freezer in the middle of a pandemic?).

However, during the same period, the interest rate was cut by 625 basis points, from 13.25% to 7%. According to historical data, consumer financing for appliances picks up around six months after a policy rate cut, which bodes well for PEL. It is also good news for the company’s financials, since the company has a debt-to-equity ratio of 57%. The fall in interest rates should translate to savings of Rs600 million in interest costs.

In addition, farmers have more liquidy these days, thanks to a spate of helpful government measures: a cut in the Gas Infrastructure Development Cess (GIDC) on urea bags, a subsidy for fertilizers, a rise in the wheat support price, and distribution of funds under the Ehsaas program. All of this means more cahs flows for farmers on a whole, and more money to spend on nice appliances.

This pent up demand is why Kumar expects sales of appliances to grow by 20% year-on-year to 414,999 units in 2021, compared to 345,832 units in 2020.

And exactly which two appliances are growing? Well, refrigerator sales of the company have grown at an annual rate of 12% over the last three years. That being said the Covid-19 lockdown and higher interest rates caused refrigerator sales to decline 19% year-on-year in the first quarter of 2020, and is expected to decline by 25% year-on-year in the second quarter. And yet, since the lockdown has been lifted, Kumar expected sales to pick up and for the remaining two quarters to show 15% year-on-year growth.

In ACs, the company holds only a 10% market share – but AC sales have shown a five-year compound annualised growth rate (CAGR) of 64%. Kumar expects 15% year-on-year growth during the second half of 2020, after a subdued first half (again, because of Covid-19 lockdowns).

“During 2021, we estimate ACs sales to grow by 20% YoY to 90,997 units compared to 75,831 units in 2020,” notes Kumar.

PEL is also benefiting from slew of factors outside of its control. Pakistan is becoming more urbanized (at 43% in 2019, compared to just 33% in the year 2000. Between 2012 and 2020, per capita income and remittances have grown at CAGRs of 7% and 6% respectively. The central bank has made it mandatory for banks to allocate 5% of their private sector advances for the construction sector. And finally, Pakistan has grown warmer, experiencing a 0.6 degree Celsisu jump in the last century.

So: a more urban population, moving into brand new homes, with money in their pockets and finding that their fans just will not cut it in this heat: this means a greater demand for electrical goods in the future.

It is not just PEL that has picked up on this trend: Panasonic Marketing Middle East & Africa has partnered with PEL on high-end goods. So far, high-end ACs have been introduced. But growing incomes, and rising urbanization, means that Panasonic thinks that there will be more ‘high end’ customers to cater to in the future.

Now, to the second segment: power supplies. PEL dominates in the power transformer sector, holding an 81% share in the market after Siemens exited. Similarly, it holds the highest share in the distribution transformers market, at 31%.

Comment by Riaz Haq on February 17, 2021 at 10:10pm
Aggregate measures of economic growth, like gross domestic product, get the headlines. But the rise of G.D.P. in recent decades has not lifted all boats, and the restoration of G.D.P. growth is not the same thing as helping those who have suffered during the pandemic. Telecommuters with their retirement savings in the stock market are doing fine, at least in financial terms. Meanwhile, the Fed estimates the unemployment rate for the bottom quarter of households is more than 20 percent.

https://www.nytimes.com/2021/02/16/opinion/democrats-biden-inflatio...

My colleague Paul Krugman has aptly described this legislation as “disaster relief.” Perhaps fewer people should get $1,400 checks. Perhaps the government should keep shipping out unemployment checks until hiring rebounds, instead of setting an arbitrary deadline. But the right amount of spending is the amount necessary to get the pandemic under control and to get people back on their feet.

The necessary spending would stimulate the economy, of course. But even on those terms, it’s hardly clear that it would raise inflation to uncomfortable heights. The output gap is an elegant concept, but nobody knows how to measure it precisely, nor is its relationship to inflation clearly understood. Guesses by educated people are not the same thing as educated guesses. And there are plenty of smart people who don’t see inflation coming over the horizon. The most recent Survey of Professional Forecasters, published Friday, anticipates an annual average inflation rate of 2.03 percent over the next 10 years.

This is not meant to license profligacy, nor to ignore inflation. It is meant to put the spotlight where it belongs: on the merits of the plan.

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