Major progress in the country’s security, economic and political environments is leading to a burgeoning middle class in Pakistan, and foreign companies are predicting a rise in consumer demand and spending, a Wall Street Journal report said Wednesday.
The report attributes the rise in middle class to the soaring stability in the country in areas of politics, economy and security, noting a considerable decline in terrorist attacks and an eight-year high economic growth.
A multi-billion infrastructure investment programme is expected to further fuel the growth.
The rise in middle class in Pakistan is in contrast to the shrinking middle class in Pakistan which had fallen to 50 per cent in 2015 from 61 per cent in 1971, the report said quoting the US-based Pew Research Centre.
“Pakistan is entering the hot zone,” the report quoted Nestle’s CEO for Pakistan, Bruno Oliehoek, as saying, who sees the country at a tipping point of exploding demand. The company’s sales have doubled to $1 billion in the past five years, the report said.
Pakistan is the sixth most populated country and “now, major progress in the country’s security, economic and political environments have helped create the stability for a thriving middle class,” the report said.
“What we see is consumer spending is rising and a middle class coming up,” the report quoted the new Engro CEO, Hans Laarakker, as saying, whose Royal Friesland Campina NV, a Dutch dairy company, paid $461 million last month to buy control of Engro Foods.
“Late last year, China’s Shanghai Electric Power agreed to pay $1.8 billion for a majority of Karachi’s electric supply company; Turkish electrical appliance maker Arcelik paid $258 million for a Pakistani appliance maker, Dawlance, saying Pakistan has an ‘increasingly prosperous working and middle class’; and French car maker Renault SA said it was seeking to set up a plant in Pakistan.”
According to a World Bank report, poverty in Pakistan has seen a ‘staggering fall’ from 2002 to 2014, down to 29.5 per cent.
Giving an example of the thriving middle class in Pakistan, the WSJ report noted that motorcycle purchases soared in Pakistan to 2 million a year now from 95,000 in 2000, pushing the Honda Motor Co to double its production capacity to meet the rising demand.
“All these big companies globally, if they’re not looking at Pakistan, need to look at Pakistan because it’s a huge consumption economy emerging,” chief executive of Honda’s Pakistan joint venture Saquib Shirazi said.