ISLAMABAD: Pakistan’s informal economy has expanded, reaching 91.4 percent of Gross Domestic Product (GDP). At a PIDE conference on Thursday, economist, M Ali Kemal said, “according to data for 2007-08, our formal GDP is half our actual GDP. However, it is still an under-estimated figure since investment data is not adjusted. The informal economy is 91.4 percent of the formal economy.”
He further said that the formal economy contributed Rs10,242 billion of the estimated Rs19,608 billion that the economy generates. Moreover, the informal economy stands at approximately Rs9,365 billion.
“Estimating the size of the underground economy is crucial for policy makers,” said Kemal. According to Economic Survey findings, total consumption for the entire population of the country is Rs17,261.6 billion and private consumption is Rs7,835.31 billion.
The sum of Rs9,426.29 billion is not reported in the formal economy.
During the session on poverty and household consumption, Dr Ashfaque H Khan, Dean NUST Business School (NBS) and Umer Khalid cited findings from a research paper on the consumption pattern of male and female-headed households in Pakistan.
According to their findings, marginal expenditure shares were highest for housing, durables, food and drink for households headed by men while they were highest for durables, followed by housing and food, and drinks for households headed by women. Higher marginal expenditures by households headed by females on education and durables were found in comparison with their male counterparts as these results were consistent in urban and rural areas of Pakistan.
Further, households headed by women were found to have higher budget shares for education, housing, fuels and lighting, clothing and footwear and lower average expenditure on food, drink, transport and communication compared to those headed by men.
The study also examined the consumption behavior of both types of households to determine consumption patterns and how they vary with change in economic status.
This analysis revealed that in the first three expenditure quintiles, the consumption expenditures of households headed by men were higher than those by women.
Moreover, in the last two quintiles, the consumption expenditures for households headed by women were slightly higher than those headed by women.
In another presentation titled “Multidimensional Poverty Measurement in Pakistan,” Taseer Salauddin said that the study showed that educational poverty in Pakistan increased from 2.4 percent to 20.64 percent over several years.
The deterioration in education also nullified slight improvements in health, empowerment, living standards as well as water and sanitation.
Salauddin said that whereas poverty headcount measures do not provide clues to suitable policy, multidimensional measures show that health and education are critical. Pakistan has witnessed a dramatic rise in poverty.
Failing on the educational front does not bode well for the future and there is an urgent need to undertake suitable measures to rectify this problem.