A recent report from Optimus Capital Management, dated 5 January 2026, highlights a severe deterioration in Pakistan’s household savings, plunging 66% from FY19 to FY25, falling from an average of USD 32 to USD 11 per household. The lower income quintiles bore the heaviest brunt, with the bottom 20% experiencing a 38.3% drop and the second quintile a staggering 52.6% decline. Middle and upper-middle groups also faced reductions, underscoring broad-based financial strain in the economy.
A K-shaped recovery is an economic phenomenon that occurs after a recession, where different parts of the economy—such as industries, income groups, or sectors—recover at vastly different rates, creating a diverging path that resembles the letter “K” on a graph.
Uneven Path to Spending Recovery
Despite the savings crisis, average household expenditure in Pakistan edged up 4% from USD 272 in FY19 to USD 283 in FY25, primarily fueled by a 13% increase in the top quintile’s spending. Essentials such as food, housing, energy, and transport retained a hefty 68.7% share in FY25, while health and education spending was cut by 19%. The top 20% now account for around 44% of national consumption, according to PBS HEIS data. Discretionary spending lingered low at 25.5%. Key sectors like cement dispatches and beverage manufacturing signal muted demand, with electrical equipment showing erratic trends. Optimus Research anticipates a slow uplift in average household spending amid a classic K-shaped recovery, where affluent segments pull ahead while lower tiers struggle.