Karachi is among the world’s top 10 cheapest cities in the world again, according to a new report.
The Economist Intelligence Unit’s Worldwide Cost of Living 2019 report states that although the best value for money ─ at least by Western standards ─ is traditionally offered by South Asian cities and certain Middle Eastern cities, cheap does not always mean cheerful.
“Put simply, cheaper cities also tend to be less liveable,” the report noted.
For instance, the cheapest city this year, Caracas in Venezuela, “saw a significant worsening of economic conditions in 2018, with hyperinflation and a breakdown in public services fuelling growing social unrest”, the report stated.
Although the Venezuelan government “unified and devalued the official exchange rates in early 2018 in an attempt to reduce currency pressure, but amid hyperinflation, the currency remains hugely overvalued, as reflected in an extremely large black-market premium”.
The second cheapest city this year is Damascus, Syria, which has remained a stronghold for the militant Islamic State group, which declared its caliphate in the war-torn country in 2014. US-backed Syrian armed forces announced victory over IS today.
About Damascus, the report said: “The citizens of Damascus might not have felt that the city was getting cheaper, however, with inflation averaging an estimated 28 per cent in the country during 2017. Yet local price rises have not complete offset a near-consistent decline in the value of the Syrian pound since the onset of war in 2011.”
The EIU report noted that Karachi, Tashkent, Almaty, and Lagos ─ all of which are among the 10 cheapest cities in the world ─ “have faced well-documented economic, political, security and infrastructural challenges, and there is some correlation between the EIU’s Worldwide Cost of Living ranking and its sister ranking, the Global Liveability survey”.
Last year, Karachi held the 137th spot on the EIU’s ranking of liveable cities ─ just four places above the bottom of the table. It only managed to fare better than Damascus, Dhaka and Lagos on the survey ranking cities on a range of factors, including political and social stability, crime, education and access to healthcare.
The EIU’s Worldwide Cost of Living report this year said that inflation and devaluations were “prominent factors in determining the cost of living” last year, with many cities falling on the rankings (becoming cheaper to live in), due to economic turmoil, currency weakness or falling local prices.
“Several emerging markets suffered currency volatility, primarily as a result of monetary tightening in the US and the strengthening of the US dollar,” the EIU report concluded.
The report predicted that 2019 will see global growth slowing even further, reaching its lowest point in 2020.
“External conditions deteriorated late last year owing to the US-China trade war and externalities related to this are expected to continue throughout 2019,” it said.
According to the EIU, the rebound in oil prices which began in 2017 and 2018, along with other commodity prices, could impact prices of other goods in the shopping basket.
Oil prices are expected to continue weighing on economies that rely heavily on oil revenue. “This could mean austerity, economic controls and weak inflation persisting in affected countries, depressing consumer sentiment and growth.”
“Equally, 2019 could see the fallout from a number of political and economic shocks having a deeper effect,” the report stated, adding that the Brexit and related currency weaknesses could translate into further price hikes as “supply chains become more complicated and import costs rise”.