Pakistan has 18th largest ‘middle class’ in the world: report

[mr42O]

KARACHI:
Pakistan’s middle class consists of over 6.27 million people, according to Credit Suisse, a global financial services company.

In its Global Wealth Report 2015 released on Oct 13, Credit Suisse said Pakistan has the 18th largest middle class worldwide.

The study revealed that 14% of world adults constituted the middle class in 2015 and held 32% of world wealth. The share of middle-class adults in Pakistan’s total adult population of 111 million was 5.7% in 2015 as opposed to India’s 3% and Australia’s 66% in 2015.

Middle-class Pakistani adults constituted 0.9% of the worldwide middle-class population. The highest concentration of middle-class population in 2015 was in China (108.7 million), followed by the United States (91.8 million) and Japan (62 million).

Read: Disproportionately: Taxation system not anti-poor but anti-middle class

Defining ‘middle class’

Economists use a variety of methods, such as income and standard of living, to define what constitutes the middle class. Credit Suisse uses the measure of ‘personal wealth’ – or a ‘wealth band’ instead of an ‘income range’ – to determine the size and wealth of the middle class around the world.

Taking the United States as the benchmark country, Credit Suisse considers an adult to be part of the middle class if they have wealth between $50,000 and $500,000 valued at mid-2015 prices.

Credit Suisse came up with the minimum and maximum figures for the US middle-class wealth band based on its median earnings and the amount of capital a person close to retirement age needs to purchase an annuity paying the median wage for the remainder of their life.

Read: Chinese middle class now the world’s largest

For the rest of the countries, Credit Suisse uses the IMF series of Purchasing Power Parity (PPP) values to derive equivalent middle-class wealth bounds in local terms.

Being a lower per-capita country, Pakistan has lower prices and consequently a reduced middle-class threshold. To be a member of the middle class in 2015, according to Credit Suisse, a Pakistani adult must have wealth of at least $14,413.

In terms of the local currency that buys one dollar for Rs104 these days, a Pakistani adult should be considered part of the middle class if they have wealth of between Rs1.5 million and Rs15 million.

With $14,413, Pakistan has the third lowest “middle-class lower bound wealth” for 2015, followed by India ($13,662) and Ukraine ($11,258). This suggests Pakistan has lower prices in general, which enables people to join the middle class by crossing a relatively lower threshold of wealth band.

Read: Minding middle class aspirations

Wealth in Pakistan

According to Credit Suisse, total wealth in Pakistan amounted to $495 billion in 2015. Given that the figure stood at $170 billion in 2000, total wealth in Pakistan has increased at an annualised rate of 7.4% for the last 15 years.

Total wealth of the world increased on average by 5.2% annually over the same 15-year period, the report shows.

A little more than 90% Pakistani adults had wealth less than $10,000 in 2015. The share of Pakistani adults with wealth between $10,000 and $100,000 in 2015 was 9.8% while only 0.1% adults owned wealth in the range of $100,000 and $1 million, the report revealed.

Published in The Express Tribune, October 16th, 2015.

Pakistan has 18th largest ‘middle class’ in the world: report - The Express Tribune

 

[Providence]

Congratulations.

However, I must say rank means very little. Rank only indicates a relative position in the peking order. It is not a cardinal scale. For having visible differences due to this "large middle class" you need absolute numbers.

The purchasing power difference between rank 1 and rank 2 might be bigger than the absolute difference between say rank 3 and rank 100. You can't interpret that rank 100 guy is 33 times worse off as compared to rank 3 guy. That would be patently wrong.

Cheers !

 

[Max Pain]

Congratulations.

However, I must say rank means very little. Rank only indicates a relative position in the peking order. It is not a cardinal scale. For having visible differences due to this "large middle class" you need absolute numbers.

The purchasing power difference between rank 1 and rank 2 might be bigger than the absolute difference between say rank 3 and rank 100. You can't interpret that rank 100 guy is 33 times worse off as compared to rank 3 guy. That would be patently wrong.

Cheers !

Indeed,
and in that aspect being ranked 18th isnt really something to celebrate,
the disparity between upper and lower class is still pretty high here.

 

[I M Sikander]

Indeed,
and in that aspect being ranked 18th isnt really something to celebrate,
the disparity between upper and lower class is still pretty high here.

Tu rotay he rahay ga bhai

 

[ramu]

The world’s middle class will be 5 billion by 2030

Millions of newly affluent people in emerging economies are reshaping and resizing the global middle class. The world’s middle class will swell from 2 billion to almost 5 billion by 2030, with most of that growth coming from developing countries, according to the Organisation for Economic Co-operation and Development. The world population in 2030 is expected to be about 8 billion.

The OECD defines “middle class” as making $10 to $100 a day, adjusted for the purchasing power of each currency. Today, people in developing countries make up almost 30% of the world’s consumer spending, up from 18% a decade ago as they become middle class. This change, what the US National Intelligence Council called a “tectonic shift,” is one the most important trends for the next several decades.

For one, growth of both multinationals and the global economy will depend more and more on these emerging market consumers, especially in Asia. They are spending more on basic necessities like homes and food, but also extras such as meat, mobile phones, and air conditioners. Global middle-class spending should rise from $21 trillion today to $51 trillion in 2030.

The rising purchasing power of these new shoppers has retailers and market analysts, who have given emerging market consumers their own moniker of “the next billion,” salivating. Multinational corporations have been trying to tap into the Chinese consumer market via tailoring goods to local tastes (“hot pot” flavored Lays chips or “green tea” Oreos).

But emerging market consumers are diverse and difficult to predict. Multinationals like Wal-Mart have so far been beaten by local competitors in China. Home Depot has all but left the country after staking its strategy on the mistaken belief that wealthy Chinese would be into Western-style DIY home projects.

Besides retail purchasing power, growing middle classes could be good for the individual country. Some academics argue that a middle class isa prerequisite for stronger, more sustainable economic growth (economic historians say the existence of British and European middle classes inspired faster growth in the 19th century). Countries with smaller middle classes tend to be easily polarized and focused on redistributing resources, so the argument goes. Political awareness may be another effect: As middle classes grow, so should demand for government accountability, rule of law and general economic reforms.

China and India are expected to have the largest growth in middle classes over the next several decades. (Brookings)

The world’s middle class will number 5 billion by 2030 - Quartz

 

[silent hawk]

Guess everyone here is in the top 6%

 

[Faiez]

Indeed,
and in that aspect being ranked 18th isnt really something to celebrate,
the disparity between upper and lower class is still pretty high here.

Why do you think inequality is bad ?

Inequality is not a bad thing.

 

[Max Pain]

Why do you think inequality is bad ?

Inequality is not a bad thing.

please enlighten me!

 

[CHN Bamboo]

WOW...Great...

 

[WaLeEdK2]

The thing is do they pay their taxes?

 

[VCheng]

The thing is do they pay their taxes?

Of course they do. Everyone in Pakistan pays lots of taxes, albeit indirect taxes.