A new study paints a stark picture of the deepening economic crisis in Pakistan, highlighting the growing financial hardship faced by urban households. The study, conducted by Pulse Consultant, reveals that 74% of urban households are struggling to meet their monthly expenses, a 14% increase from last year. This widespread financial strain has forced many households to adopt various coping strategies.
Sixty percent of respondents have been forced to reduce essential expenses, including groceries, while 40% have turned to borrowing money from acquaintances. Additionally, 10% of respondents have taken on part-time work to supplement their income. Even among those who manage to cover their basic needs, 56% are unable to set aside any savings, further highlighting the precarious financial situation faced by many urban Pakistanis.
The study, which surveyed over 1,110 respondents across Pakistan’s 11 largest cities between July and August, underscores the severity of the economic crisis. A year ago, in May 2023, 60% of households reported financial difficulties. Today, that number has climbed dramatically.
Pulse Consultant’s CEO announced plans for a more extensive follow-up study later this month. This upcoming survey aims to assess the impact of inflation on purchasing and consumption habits, with a larger sample size of over 1,800 respondents across 17 major Pakistani cities.
Against this backdrop of economic distress, the Pakistani government, led by Shehbaz Sharif, unveiled a three-year economic plan last month. The plan proposes to increase the provinces’ share in the federal budget from 39.4% to 48.7% by 2027. However, it also acknowledges the country’s mounting debt burden, projecting total debts to reach PKR 79,731 billion by the end of the current fiscal year. The government claims to be working on debt reduction strategies, including refinancing and interest rate risk management.
In a related development, Pakistan recently secured a three-year, $7 billion aid package deal with the International Monetary Fund (IMF). However, a report last month revealed that government borrowings in the first 11 months of the outgoing fiscal year have surpassed the combined borrowings of the two preceding fiscal years, underscoring the depth of Pakistan’s economic challenges.
As Pakistan grapples with these economic hurdles, the impact on its urban population serves as a stark indicator of the broader financial distress facing the nation of approximately 240 million people.
