The Pakistani retail sector is experiencing a major setback in the months leading up to the Muslim festival of Eid al-Fitr. According to Tariq Mehboob, CEO of men’s clothing company Royal Tag and head of the Chain Store Association of Pakistan (CAP), there has been a 20% drop in retail sales across all categories except for women’s clothing. The decline can be attributed to the ongoing effects of high inflation on the country’s economy.
Eid al-Fitr, which marks the end of Ramadan, is the biggest festival of the year for Muslims worldwide. The weeks leading up to the festival typically witness a surge in retail sales, as people purchase new clothes, shoes, and accessories to celebrate the occasion. However, this year, the retail sector in Pakistan has been hit hard by the economic crisis gripping the country.
Severe Economic Crisis in Pakistan
The entire country is currently experiencing a severe economic crisis, which has resulted in decades-high inflation. As a result, the purchasing power of the average Pakistani has been greatly reduced, and many people are struggling to make ends meet. According to Asad Shafi, owner of women’s clothing company Cross Stitch, Pakistanis have lost more than 50% of their wealth in the past two years due to devaluation. As a result, they now have 50% fewer financial resources available, but the cost of goods has gone up by 100%.
Low Expectations for Fashion Retailers
Given the challenging economic climate, fashion retailers in Pakistan have lowered their expectations for sales during the Eid season.
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Pakistan’s economic outlook remains bleak, with growth expected to be slow for the foreseeable future. The government predicts that the economy will expand by only 2% this fiscal year. In April, the World Bank further downgraded Pakistan’s growth expectations from 2% to 0.4%. This highlights the urgent need for the country’s leaders to take decisive action to address the underlying causes of the economic crisis and support businesses and consumers alike.
