Bank of Punjab chief seeks ‘Welfare GDP’

Islamabad: Bank of Punjab's CEO, Zafar Masud, has called for a 'Welfare GDP' measure to better reflect the livelihoods of ordinary people amidst economic challenges. Masud delivered a lecture on 'Measuring Welfare-GDP Beyond Arithmetic' at the Islamabad Policy Research Institute (IPRI). He questioned why Pakistan's economy, growing at 3.7%, does not register at the household level.

According to Masud, while GDP grew by 18.8% over five years, population growth reduced this figure to 9.6%. Adjusting for income distribution and the high costs faced by the poor in areas like food and fuel, the bottom 40% of households, or the poorest decile, were found 3.0% worse off. Masud highlighted that the wealthiest 10% captured 9.9% of welfare gains, while remittances, amounting to $42 billion annually, only increased growth to 13.1%, leaving the poorest no better off.

He also pointed to labour market strains, such as a four-to-one dependency ratio and a labour force participation rate of 45%. Comparing Pakistan to nations like Argentina, Greece, and Sri Lanka, Masud found reason for cautious optimism. He pointed to the UK, US, and Sweden as examples of countries that built prosperity gradually through what he called an 'anchored compact' of credible rules that lower capital costs and lift living standards broadly.

Masud was critical of successive governments' blind adherence to lenders' prescriptions, emphasizing that while stability is visible, welfare remains elusive. He proposed five reforms to reset Pakistan's economic trajectory: ending the stabilisation trap through honest fiscal accounting, redirecting capital toward high-return sectors like agriculture, SMEs, and capital markets, competing globally on productivity, and ensuring long-term policy predictability for investors and citizens.