Eid sales bonanza
AS Eid approaches, markets and shopping malls in the country come alive with eye-catching decorations and make-shift stalls for bangles, hina and accessories. The rush and enthusiasm of customers in bazaars defy the perception of a sagging economy.
The size of the Eid economy is reckoned at about Rs600 billion in the current year. The changing profile of the country’s Eid market reflects business undercurrents and flexibility to make adjustments to capitalise on Eid sentiments.
It also reveals the resilience of the society striving ahead despite all odds, defying security risks.
“It is incredible how citizens deal with fear of terrorist attacks in city centres when visiting Eid markets with families. After every tragedy they take some time to count their loss and return to normal routine to tease their detractors”, said a market expert who preferred anonymity.
This year the share of upscale markets in cities to the total sale volumes has increased. The arrival of multiple international brands in shopping malls and persistent campaign to promote local brands facilitated the shift.
The sale hike is said to be more visible in Karachi, Rawalpindi and Islamabad comparatively. Lahore, Peshawar, Quetta and other smaller towns are trailing behind with a noticeable margin of distance. No satisfactory explanation was available to justify the trend.
The figure of Rs600 billion is based on the estimates of Eid sales/purchases supported by the data of cash withdrawals from banks, remittances inflows, the quantum of giving during Ramazan and the issue of new notes by the State Bank to meet the spike in their demand.
The financial market sources expect pre-Eid cash withdrawals by account holders to touch Rs200 billion this year. It was said to be at Rs170 billion in 2011. The money market sources report liquidity crunch in banks every year during Ramazan and the banks are supported by the country’s central bank through massive cash injections..
The official data on total individual’s cash withdrawals from the banking system during Ramazan was not immediately available.
The amount is inflated by inflows of remittances. Pakistanis living abroad send huge amounts of money to their relatives in Pakistan to cover Eid expenses. The senders use multiple channels to transfer funds and do not rely solely on banks. It partially explains the gap between the official count and the actual remittances.
The State Bank of Pakistan will issue Rs123 billion worth of new notes compared to Rs111 billion issued last year, Dawn learnt from a source in the central bank.
Add to this the tradition of giving during Ramazan on account of Zakat, Khairat, Fitra, etc. by Muslims and one conveniently
arrives at an astonishing figure of Rs600 billion worth of Eid-spending.
The lean business reported earlier in a story in this paper was based on sale situation in early days of Ramazan. The market watchers and retail market associations confirm a dramatic shift upward in the trend from 11th Ramazan, 20 days ahead of Eid.
An informal survey based on interviews of office-bearers of local market associations brought some interesting facts to light.
They reported record business in cities though the urban economy is assumed to have shrunk under the PPP-led democratic government.
Except for civil servants whose salary almost doubled over the past five years the income of salaried classes generally remained frozen during the period. The underemployment surged in cities as investment dipped and businesses under stress retrenched part timers and contractual staff.
The trend in the retail business that is the third largest contributor to the GDP at over 17 per cent, next to that of industry at 25.8 per cent and agriculture at 21.1 per cent, however, indicates the buoyancy of the informal economy.
The retail sales grew almost at the same rate as did the economy over the last year. The Pakistan Economic Survey reported 3.8 per cent growth in retail business.
The year- on- year inflation has moderated but is still high enough to erode the real income of families with static nominal income by an annual 15 per cent on an average.
“The individual income might not have increased but the family spending power has constantly been improving. Either more members are contributing to the family income or the family is receiving funds from relatives abroad, rich relations at home, community, etc.)”, commented an expert.
“The markets in Karachi are reporting record sales. If the trend is not interrupted by some terrorist activity we expect 60 per cent more business this year”, Atique Mir who heads influential Alliance of Market Associations in Karachi told Dawn over telephone.
“Yes, markets are crowded in Lahore but sales figures are not as astonishing. For me, the nominal numbers might exceed last year’s volumes but the expectation of a dramatic surge seems unrealistic”, said a market observer.
“In Lahore, on an average, locals spend more on traveling. The visit to family elders often residing in rural Punjab is almost an
unavoidable social compulsion. What could have been spent in Eid bazaar is pocketed by transporters running inter city buses”, he added.