The average household income in Pakistani has grown by 67 percent as compared to 42.97 percent expenditure growth from 2001 to 2018, according to a report by the World Bank (WB).
Data shows that average household income grew from Rs. 14,941 in 2001 to Rs. 24,954 in 2018 (an increase of 67%), to increase further in the following years. However, expenditures only increased from around Rs. 15,636 to Rs. 22,355 (42.97% increase) during the same period.
Households’ net worth also increased from 60.2 points to 75.7 points on the index, as per the data.
Economists say that the widening gap between expenditures and income has enabled Pakistanis to increase their savings over the last two decades.
The WB report showed that by 2018, rural households owned 32 percent more wealth than urban households on average.
The data also revealed that expenditures and income grow equally but income starts outpacing household expenses in the early 40s. This has allowed the savings rate to grow by 20 percentage points by the age of 55.
More than 80 percent of Pakistanis prefer holding savings in the form of residential houses and land due to the lower risk and more liquidity associated with them. Other assets such as business durables or stock are yet to become more common forms of savings for the average Pakistani household.