Consumption-driven growth outlook

Rising poverty and unemployment continue to challenge consumption, which leading bankers consider crucial for economic growth. “Pakistan’s poverty index is 40 per cent (historically 20pc), much higher than India and Bangladesh’s 15pc to 20pc. Another 20pc borderline segment lives with very compressed income levels,” former State Bank governor Salim Raza was quoted as saying in ‘Road to Sustainability 2024’, a report by AF Ferguson & Co In his view, “The corresponding lack of purchasing power may create major domestic demand challenges.” The consumption-led economic growth fuelled by debt-driven imports lacked sustainability for want of required dollar earnings and government revenues owing to low productivity. To improve the macroeconomic imbalances that were created, measures were taken to curb domestic demand. Now, it is feared that lowered consumption may pose a risk to economic recovery.