⚫ About 83% to 85% of income in Pakistan is spent on private consumption. ⚫ Pakistanis are unable to save! ⚫ Why are Pakistanis unable to save and invest less?

1. F O R C I R C U L AT I O N
Why are Pakistanis unable to save?
Macro Pakistani

2. 2
Income growth channel can be a strong determinant of saving
Real wages have been increasing in Pakistan despite relatively low labor productivity
Source: EIU

3. 3
For real income growth, you need labor to produce more output
Across sectors, average labor productivity over last 5 years has not changed much
Average labor productivity
Includes less labor intensive
GDP contributors such as
finance, government and
housing
Marginal improvement in
productivity of Pakistan’s
largest employer
Note: Real output at 2005-06 prices
Source: Pakistan Bureau of Statistics; MP Analysis

4. 4
Productivity in the largest employer is 30-50% of best practices
Within agriculture, crop yields have consistently lagged behind benchmarks
Note: Cotton yield shown is for seed cotton
Source: Agricultural Statistics of Pakistan 2017-18

5. 5
Another way to increase saving would be to limit out-sized consumption
Within non-food consumption, Pakistan spends the most of housing and utilities
Source: Economist Intelligence Unit

6. 6
Financial technology could be one way of improving saving rates
Majority of emerging affluent Pakistanis save by storing cash at home
% saving by storing cash at home % using digital tools and services frequently
Note: As of 2017
Source: SCB Emerging Affluent Survey
Typically save in savings
accounts or time deposits
Frequent digital services
users save up to 8% more
than others