Credit Suisse: Pakistan's Wealth Inequality is the Lowest in South Asia

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Wealth Inequality:

Inequality is measured in terms of Gini index. It ranges from 0% for perfect equality (when everyone has the same wealth)  to 100% for total inequality (when all of the wealth is owned by one person).  On this scale, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, China’s 78.9% and India's 83%.

Data Source: Credit Suisse Graph: Counterview


Household Wealth:

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

Ownership of Appliances and Vehicles: 

Growing household wealth in developing nations like India and Pakistan is reflected in  ownership of consumer durables like computers, home appliances and vehicles. This data is sourced from periodic household surveys like NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL


India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL
Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Summary:

Credit Suisse wealth data for 2017 shows that Pakistan has the lowest wealth inequality in its region as measured by Gini index. Lower inequality can be seen in terms of rising percentage of households that can afford to buy durables like appliances and vehicles as reported by Dr. Abdul Ghani of Karachi School of Business and Leadership (KSBL).

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2016

Pakistan: A Majority Middle Class Country

Karachi School of Business and Leadership

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital

China-Pakistan Economic Corridor

Comments

Riaz Haq said…
#Broadband subscribers including #3G, #4G cross 49 million in #Pakistan. #Internet #Mobile https://dnd.com.pk/broadband-subscribers-including-3g-4g-cross-49-million-in-pakistan/135907 … via @Dispatch News Desk

The total broadband subscribers including 3G and 4G services have crossed around 49 million in the Country till October this year, registering a reasonable growth rate with each passing month.

As per latest figures issued by Pakistan Telecommunication Authority (PTA), of the total number of broadband users, major contribution has been made in shape of 3G and 4G subscribers by Mobile Phone Operators which reached 46 million by October 2017.

The number of broadband subscribers in other technologies included DSL 1,550050, HFC 51,715, Wimax 151,330, FTTH 54,107 and EvDO 55,8,740. The tele-density of total broadband has reached 22.6 per cent while 3G and 4G tele-density of the total subscriber base crossed 21.6 per cent.

Experts of telecom industry are having a viewpoint that portable mobile broadband devices like MiFi and Wingles are one of the main reasons of this growth in 3G/4G subscribers and many more will follow this trend in upcoming days.

Meanwhile, Country’s largest mobile phone operator, Mobilink has overtaken its competitors as 3G/4G player after official figures were released by PTA. Jazz subscribers base was 13.94 million 3G and 1.56 million 4G till the period mentioned.

A senior official of the Company said key to this leading position is consistent investment to further innovate on behalf of subscribers by delivering not just the best 3G/4G and voice network, but also improvements in customer service, and product lines.

As per statistics, the 3G subscribers of Zong have now extended to 8.99 million and 4.78 4G users by end of October 2017. The number of Telenor 3G subscribers was 10.64 million and 1.16 4G users till the period mentioned above.


An increase has also been observed in Ufone subscribers base, reaching 5.45 till the period from 5.3 million 3G users by August 2017.

Meanwhile, the mobile broadband is helping in widespread adoption of social media which has an impact on everyday lives of billions of people around the world.

Social media has also been gaining vast popularity among masses in Pakistan. The introduction of mobile broadband coupled with influx of affordable Smartphones had a catalytic effect on use of social media.

People turn towards social media to voice their opinions, experiences, suggestions and feedback on any topic or constituent of the society.

http://www.pta.gov.pk/en/telecom-indicators
Riaz Haq said…
#Pakistan's bottom quintile #income share has increased from 8.1% to 9.6% since 1990. It is the highest in #Asia, #world, according to UNESCAP Statistical Yearbook. #inequality http://www.unescap.org/sites/default/files/SYB2015_Full_Publication.pdf …

Although more people in China have
lifted themselves out of poverty than any other
country in the world, the poorest quintile in that
country now accounts for a lower percentage
of total income (4.7 per cent) than in the early
1990s (8.0 per cent). The same unfortunate
trend is observed for a number of other
countries, including in Indonesia (from 9.4 per
cent to 7.6) and in the Lao People’s Democratic
Republic (from 9.3 per cent to 7.6).

In a number of other countries, people in the
poorest income quintile have increased their
share of total income including in Kyrgyzstan
(from 2.5 per cent to 7.7), the Russian Federation
(4.4 per cent to 6.5), Kazakhstan (7.5 per cent to
9.5) and Pakistan (8.1 per cent to 9.6).

Riaz Haq said…
Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.

First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.

http://www.riazhaq.com/2016/11/world-bank-reports-big-jump-in-living.html
Riaz Haq said…
#India’s Missing #MiddleClass : Multinational businesses relying on Indian consumers face disappointment. #China #Inequality

https://www.economist.com/news/briefing/21734382-multinational-businesses-relying-indian-consumers-face-disappointment-indias-missing-middle …


https://twitter.com/haqsmusings/status/951542797483499520


For all the talk of wanting to tap the middle class, no firm moving into India thinks it is targeting the middle of the income distribution. India’s mean GDP per head is just $1,700, and 80% of the population makes less than that. Adjust for purchasing-power parity by factoring in the cheaper cost of goods and services in India and you can bump the mean up to $6,600. But that is less than half the figure for China (see chart 2) and a quarter of that for Russia. What is more, foreign companies have to take their money out of India at market exchange rates, not adjusted ones.

Defining the middle class anywhere is tricky. India’s National Council of Applied Economic Research has used a cut-off of 250,000 rupees of annual income, or about $10 a day at market rates. Thomas Piketty and Lucas Chancel of the Paris School of Economics found in a recent study that one in ten Indian adults had an annual income of more than $3,150 in 2014. That leaves only 78m Indians making close to $10 a day.

Meagre market

Even adjusting for the lower cost of living, that is hardly a figure to set marketers’ heartbeats racing. The latest iPhone, which costs $1,400 in India, represents five month’s pay for an Indian who just makes it into the top 10% of earners. And such consumers are not making up through growing numbers what they lack in individual spending power. The proportion making around $10 a day hardly shifted between 2010 and 2016.

Another gauge is whether people can afford the more basic material goods they crave. For Indians, that typically means a car or scooter, a television, a computer, air conditioning and a fridge. A government survey in 2012 found that under 3% of all Indian households owned all five items. The median household had no more than one. How many of them will be anywhere near able to buy an iPhone or a pair of Levi’s if they cannot afford a TV set?

To get in the top 1% of earners, an Indian needs to make just over $20,000. Adjusted for purchasing-power parity, that is a comfortable income, equating to over $75,000 in America. But in terms of being able to afford goods sold at much the same price across the world, whether a Netflix subscription or Nike trainers, more than 99% of the Indian population are in the same league as Americans that count as below the poverty line (around $25,000 for a family of four), points out Rama Bijapurkar, a marketing consultant.

The top 1% of Indians, indeed, are squeezing out the rest. They earn 22% of the entire income pool, according to Mr Piketty, compared with 14% for China’s top 1%. That is largely because they have captured nearly a third of all national growth since 1980. In that period India is the country with the biggest gap between the growth of income for the top 1% and the growth of income for the population as a whole. At the turn of the century, the richest 10% of Indians made 40% of national income, about the same as the 40% below them. But far from becoming a middle class, the latter’s share of income then slumped to under 30%, while those at the top went on to control over half of all income (see chart 3).
Riaz Haq said…
Hold your elephants. The Indian middle class conjured up by the marketers and consultants scarcely exists. Firms peddling anything much beyond soap, matches and phone-credit are targeting a minuscule slice of the population (see article). The top 1% of Indian adults, a rich enclave of 8m inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income. The next 9% is akin to central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbours, Bangladesh and Pakistan. The remaining half-billion or so are on a par with the most destitute bits of Africa. To be sure, global companies take the markets of central Europe seriously. Plenty of fortunes have been made there. But they are no China.

https://www.economist.com/news/leaders/21734454-should-worry-both-government-and-companies-india-has-hole-where-its-middle-class-should-be

Centre parting

Worse, the chances of India developing a middle class to match the Middle Kingdom’s are being throttled by growing inequality. The top 1% of earners pocketed nearly a third of all the extra income generated by economic growth between 1980 and 2014, according to new research from economists including Thomas Piketty. The well-off are ten times richer now than in 1980; those at the median have not even doubled their income. India has done a good job at getting those earning below $2 a day (at purchasing-power parity) to $3, but it has not matched other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on. Middle earners in countries at India’s stage of development usually take more of the gains from growth. Eight in ten Indians cite inequality as a big problem, on a par with corruption.

The reasons for this failure are not mysterious. Decades of statist intervention meant that when a measure of liberalisation came in the early 1990s, only a few were able to benefit. The workforce is woefully unproductive—no surprise given the abysmal state of India’s education system, which churns out millions of adults equipped only for menial work. Its graduates go on to toil in small or micro-enterprises, operating informally; these “employ” 93% of all Indians. The great swell of middle-class jobs that China created as it became the workshop to the world is not to be found in India, because turning small businesses into productive large ones is made nigh-on impossible by bureaucracy. The fact that barely a quarter of women work—a share that has seen a precipitous decline in the past decade—only makes matters worse.

Good policy can do an enormous amount to improve prospects. However, hope should be tempered by realism. India is blessed with a deeply entrenched democratic system, but that is no shield against poor decisions. The sudden and brutal “demonetisation” of the economy in 2016 was meant to target fat cats, but ended up hurting everybody. And the path to prosperity walked by China, where manufacturing produced the jobs that pushed up incomes, is narrowing as automation limits opportunities for factory work.

All of which means that companies need to deal with the India that exists today rather than the one they wish to emerge. A strategy of waiting for Indians to develop a taste for products that the global middle class indulges in—cars as income per head crosses one threshold, foreign holidays when it crosses the next—may lead to decades of frustration. Only 3% of Indians have ever been on an aeroplane; only one in 45 owns a car or lorry. If nearly 300m Indians count as “middle class”, as HSBC has proclaimed, some of them make around $3 a day.
Riaz Haq said…
#Pakistan has the highest intergenerational income #mobility and the lowest #inequality among emerging economies. #WEF2018 #Davos https://www.weforum.org/agenda/2018/01/economist-plan-to-heal-fractured-societies/ …

https://twitter.com/haqsmusings/status/958166999166730242
Riaz Haq said…
Credit Suisse Wealth Report 2019

India Average Per Adult $2,127 Pakistan Average Per Adult $1,168

India Median Per Adult $596 Pakistan Median Per Adult $506.

https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html

Pakistan's wealth declined mainly because its currency devalued by 24% and its market cap dropped by 42%.


Much of the year-on-year variation in wealth levels is due to changes in asset prices and exchange rates. Exchange-rate fluctuations are frequently the source of the biggest gains and losses. However, exchange rates have been relatively stable over the past 12 months. Among the countries reported in Figure 3 (G7 countries plus China, India and Russia), the largest changes affected China and the United Kingdom – both depreciating about 3.5% versus the US dollar. Currency falls were modest elsewhere in the world, except for Turkey (–21%), Pakistan (–24%) and Argentina (–32%). Currency appreciation was even rarer, with Thailand (+8%) and Egypt (+7%) recording the biggest gains.


Equity prices showed greater regional fluctuations. Market capitalization rose in North America, but declined in much of Europe by an average of about 10%. Markets rose significantly in Russia (+15%), and by an even greater extent in Kuwait (+25%), Brazil (+35%) and Romania (+36%). In Pakistan, market capitalization dropped by 42%, compounding the impact of exchange rate losses.
Riaz Haq said…
Credit Suisse Wealth Report 2019:


https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html



Interesting facts and figures
~361
trillion USD - global wealth in 2019
~47
million millionaires worldwide
70849
USD - average 2019 wealth per adult in 2019
459
trillion USD - global wealth by 2024

Winners and losers among countries

Comparing total wealth gains and losses across the most important countries, the United States (USD 3.8 trillion) again leads the way by a considerable margin, continuing an astonishing spell that has seen wealth per adult increase each year since 2008 (however, even the United States is not immune to temporary blips: wealth per adult fell by 2% during the latter half of 2018, then recovered during the first half of 2019). China (USD 1.9 trillion) is in second place again, followed by Japan (USD 930 billion), India (USD 625 billion), and Brazil (USD 312 billion). The main losses occurred in Australia (down USD 443 billion), Turkey (down USD 257 billion) and Pakistan (down USD 141 billion).


Viewed in terms of wealth per adult, Switzerland tops the winners (up USD 17,790) followed by the United States (USD 11,980), Japan (USD 9,180) and the Netherlands (USD 9,160): see Figure 2. The main loser was Australia (down USD 28,670), with other significant losses in Norway (down USD 7,520), Turkey (down USD 5,230) and Belgium (down USD 4,330).

------------


Emerging Markets refer to China plus Argentina, Brazil, Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan (Chinese Taipei), Thailand, Turkey and United Arab Emirates. To avoid double count- ing, countries in this list are excluded from
the “Europe” and “High-Income Asia-Pacific” categories.

Riaz Haq said…
China's Xi Pressures Tycoons With 'Common Prosperity' Talk

https://www.nytimes.com/2021/09/07/world/asia/china-xi-common-prosperity.html

Four decades ago, Deng Xiaoping declared that China would “let some people get rich first” in its race for growth. Now, Xi Jinping has put China’s tycoons on notice that it is time for them to share more wealth with the rest of the country.

As the country’s leader prepares for a likely third term, he is promising “common prosperity” to lift farmers and working families into the middle class.

Mr. Xi says the Communist Party will pursue “common prosperity,” pressing businesses and entrepreneurs to help narrow the stubborn wealth gap that could hold back the country’s rise and erode public confidence in the leadership. Supporters say China’s next phase of growth demands the shift.

“A powerful China should also be a fair and just China,” Yao Yang, a professor of economics at Peking University who endorses the shift in priorities, said by email. “China is one of the worst countries in terms of redistribution, despite being a socialist country. Public spending is overly concentrated in cities, elite schools and so on.”

Officials are pledging to make schooling, housing and health care less costly and more evenly available outside big cities, and to lift incomes for workers, helping more people secure a place in the middle class. The “common prosperity” campaign has converged with a crackdown on the country’s tech giants to curb their dominance. Facing scrutiny, some of China’s biggest billionaires, like Jack Ma, have lined up to pledge billions of dollars to charity.


The pledges hold out the prospect, endorsed by Mr. Xi in a meeting last month, that China is now affluent enough to shift closer to the Communist Party’s longstanding ideal of wealth sharing. For Mr. Xi, the Communist Party’s long-term authority is at stake.

Now that economic growth is moderating, many young Chinese feel that upward mobility is diminishing. Well-paying white-collar jobs can be hard to find. Tech workers complain of punishingly long hours. Families feel they can’t afford to have more children, adding to a looming demographic crisis. For now, Mr. Xi faces little opposition, but longer term that could turn if such grievances pile up.

“Achieving common prosperity is not just an economic issue; it’s a major political matter bearing on the party’s foundation for rule,” Mr. Xi told officials in January. “We cannot let an unbridgeable gulf appear between the rich and the poor.”

The party is keen to show that it is listening to the complaints as Mr. Xi lays the groundwork for a likely third term as the party’s general secretary beginning next year. Mr. Xi wants to stave off any doubts about his claim to another term by arguing that the party can deliver social progress while rivals like the United States stagnate in inequality, said Christopher K. Johnson, a former United States government analyst of Chinese politics​​.
Riaz Haq said…
World Inequality Report: Over 85% Of Indian Billionaires From Upper Castes, None From Scheduled Tribes


https://www.ndtv.com/india-news/world-inequality-report-over-85-of-indian-billionaires-from-upper-castes-none-from-scheduled-tribes-5974949

India's income and wealth inequality, which declined post-independence, began to rise in the 1980s and has soared since the 2000s. Between 2014-15 and 2022-23, the increase in top-end inequality has been particularly striking in terms of wealth concentration. The top 1 per cent of income and wealth shares are now at their highest historical levels. Specifically, the top 1 per cent control over 40 per cent of total wealth in India, up from 12.5 per cent in 1980, and they earn 22.6 per cent of total pre-tax income, up from 7.3 per cent in 1980

This dramatic rise in inequality has made the "Billionaire Raj," dominated by India's modern bourgeoisie, more unequal than the British Raj. It places India among the most unequal countries globally. Current estimates indicate that it takes just ₹ 2.9 lakhs per year to be in the top 10 per cent of income earners and₹ 20.7 lakhs to join the top 1 per cent . In stark contrast, the median adult earns only about ₹ 1 lakh, while the poorest have virtually no income. The bottom 50 per cent of the population earns only 15 per cent of the total national income.

To fully grasp the skewed income distribution, one would have to be close to the 90th percentile to earn the average income. In terms of wealth, an adult needs ₹ 21 lakhs to be in the wealthiest 10 per cent and ₹ 82 lakhs to enter the top 1 per cent . The median adult holds approximately ₹ 4.3 lakhs in wealth, with a significant portion owning almost no wealth. The bottom 50 per cent holds only 6.4 per cent of the total wealth, while the top 1 per cent owns 40.1 per cent , and the top 0.001 per cent alone controls 17 per cent . This means fewer than 10,000 individuals in the top 0.001 per cent hold nearly three times the total wealth of the entire bottom 50 per cent (46 crore individuals).

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