THE highly charged political scene clearly failed to dampen the spirit of Eid shopping as the dark shadows of the pandemic gradually receded. Inflation, indeed, is a factor, but even that failed to encumber the majority as people stretched their budgets to the limit.

Eid festivities were sub-normal during the health crisis over the past couple of years as fear, uncertainty and Covid-induced restrictions squeezed space for people to celebrate freely. Even pre-Covid, the sharp drop in GDP growth rate in 2019 had exerted pressure on household budgets, affecting the annual Eid spending graph in the country.

The pent-up demand of lifestyle products and the craving to make up for the lost years together made the Pakistanis spend significantly more this year, driving up the Eid economy up to 50 per cent over the past year. If the increase is discounted for 13pc inflation, it will still be high at 37pc. The Eid economy is projected to have expanded from Rs480 billion in 2021 to Rs720bn this year.

In the absence of an official projection of the size of the Eid economy based on verified spending data, the base numbers were worked out taking into account input from market associations, producers/importers of consumer goods, and economists. The data of cash withdrawals from banks, the scale of the inflow of remittances during Ramazan and the volumes of new notes disbursed by the State Bank at Eid were also taken into account to work out a ballpark conservative guesstimate.

After a couple of Covid-affected years, the Eid economy has gone up by 50pc much to the relief of the markets

Former finance minister Shaukat Tarin agreed that private spending on Eid had increased significantly, and saw the trend as a testimony of his team’s exceptional performance despite the challenges. He contested the perception of rising unemployment, static salaries and eroding average household income in the country.

The expanding Eid market did not surprise him as he saw it as a natural outcome of a bouncing economy. “If large-scale manufacturing is growing at 7.8pc, bumper crops are energising the rural economy, remittances are flowing in at a record pace, astonishingly high corporate profits reduced unemployment as per the International Monetary Fund, and there is 28pc increase in income tax collection, it very clearly spells high economic growth rate.

“Can total private spending increase without a bump in household income? Step out and visit any restaurant to see for yourself. They are all packed with long waiting queues. You need to revisit your analysis of the vanishing middle class in Pakistan,” the former minister advised his critics.

Abid Umer, CEO of Al Karam Marketing, found the projected rate of expansion in the Eid market unrealistically optimistic. “The spending pattern is quite different this year due to high inflation. As discretionary spending is skewed towards food and other necessary items, the demand for other items can’t possibly be strong. Depending on the category, some brands are behind 2019 numbers whereas some have seen growth. It is important to note the prices in general have gone up by a minimum 25pc over the last year,” he said.

The representatives of major markets in key cities of Pakistan were too busy closer to Eid to offer detailed comments, but almost all of them were excited over the return of customers to the market in such big numbers and reported brisk activity.

“There is no comparison of footfall in markets this year compared to the last year. And 2020 was a nightmare. In 2021 we were chasing customers with sale offers. This year many retailers in the market had to engage extra hands to handle the rush,” Arif Memon, a leader of a local market association, told Dawn.

Nauman Najam who deals in readymade shalwar kameez for men in Bohri Bazar, the oldest shopping district in Karachi’s Saddar area, was visibly happy. “God is kind. Business is robust this year. At this rate, I expect to sell out all my special Eid stock days before Chand Raat (the final busiest day of shopping before Eid). We are already looking at the option of supplementing the supplies from wherever,” he told Dawn while simultaneously hustling with the customers.

A renowned economist attributed higher Eid spending to a booming rural economy, significantly greater remittance inflows, $5bn higher export earnings, the revival of salaries to higher than pre-Covid levels in the informal sector, and higher public spending (expressed in higher fiscal deficit). He believed that sales in volumes might not have risen as much as the margins.

Yousuf Jamshed, founder and CEO of LXY Global, a company servicing the retail sector, said the market is currently very bullish. He told Dawn that the lifestyle sector is doing exceptionally well this year. “There is no dearth of customers in Pakistan where the market is multi-layered. Established brands are not the only ones succeeding and expanding, as fresh brands have also made their presence felt in the market. Pakistan is a huge country that is still under-served.

“I say the expansion is by 30pc though in certain segments it could be 50pc. The trend to notice is the closing of the generation gap in online buying. The millennials held the hands of the boomers to break the mental barrier. It changed the landscape of online buying. In fashion apparel, there are brands that saw online sales double over the last year”.

This explained the relative calm in markets. “The level of market rush belies the actual scale of shopping as a big percentage of customers have switched to online platforms.” He mentioned a major apparel brand that sold 30pc of its stocks online.

Another expert mentioned significantly higher bank deposits, depicting higher savings and greater prosperity. According to the State Bank, the total deposits held by banks have shown a monthly growth of 2.9pc to reach Rs20.47 trillion in March against Rs19.9tr in February on account of strong overseas inflows.

According to the latest data, the deposits jumped by 14pc over the same month of the last year. The remittances touched a record $23bn in nine months till March this year. In March, the inflows were $2.8bn. The average monthly inflows normally almost double in Ramazan. Analysts believe the additional inflows are primarily directed to charities and financing Eid spending by dependent households of overseas Pakistanis.

The data on fresh notes and cash withdrawals from banks was not readily available. The leaders of the current economic team approached for comments did not respond to Dawn till the filing of the report.

Published in Dawn, The Business and Finance Weekly, May 2nd, 2022