The Effects of Covid-19 on Pakistan’s Economy
The COVID-19 has brought the world to a halt. The virus has taken thousands of lives rapidly throughout the globe. Countries across the globe have closed their borders to avoid further spread of the virus. Economic activities are suffered because of the lockdown of the cities, markets, seaports, airports, restaurants, etc. Economists predict that the global economy is moving towards a recession like that of the 1930s or 2008. Fortunately, Pakistan is not hit hard like the other countries regarding lives lost as of the later devolvement, the coronavirus has taken 4000 plus lives and the positive cases are above 20000. However, the magnitude of economic sufferings will be grave and long-lasting for developing countries like Pakistan, as it was struggling with a stagnant economy even before the disease erupted. Here are a few statistical data which magnifies the situation further.
The economic loss estimated by FBR is at Rs1.3 trillion. The loss will affect the GDP growth as there will be a reduction in the collection of tax revenue, survives loss, reduction in remittances, a drop in export and import, and reduction in agricultural production. Further, it will incur unemployment, poverty, crimes, pressure on the health system, and mental health issues. It can exacerbate the illiteracy as all the educational activities are stopped due to the lockdown.
A year ago the export stood at $2.08 billion which plunged 54 percent to $957 million during the month of April this year because of the delaying or cancellation of orders due to the impact of the disease on the global economy. The Pakistan Bureau of Statistics (PBS) released data that showed that the economic slowdown in North American and European countries, which are the top export destinations for Pakistan, brought down the country export.
Asad Umar who is the planning and development minister said a few days before that the lockdown may render 18 million jobless in Pakistan and between 20 million and 70 million may fall below the poverty line. This is alarming as Pakistan is already struggling with its unemployed youth population. The Minister said further that the lockdown was hitting the government hard as it had suffered a loss of Rs119 billion in April alone this year. He fears that the lockdown might vanish more than one million small businesses as there are self-employed and informal workers which are the most vulnerable people. For instance, the workers who are connected with the agriculture sector will lose the job immediately as there is no transportation to transfer their productions to the cities and other markets. So the cliché that it affects, all the same, is misleading as it affects people medically, socially, psychologically, and economically in a different way. Another report says that Twenty-three percent of people are living below the poverty line and this figure may double to 44.22 percent after the corona crises are over.
For poor countries like Pakistan, the choices are tough as they struggle to save lives and livelihood. Perhaps, this was the reason, the response of the federal government was whimsical as a result the government avoided the suggestions of health experts and scientists and empathize with the daily wagers and informal daily workers for whom it is difficult to make both ends meet. The economy of Pakistan was only just recovering from an external debt trap and crises, but the country witness to go back to the IMF for a bailout.
The federal government has also taken measurement in its capacity to cope with the economic situations. An Rs.1200 billion plan has been announced to mitigate the economic damages because of the lockdown. This includes a direct transfer of cash Rs.144 billion to Twenty-two million families. Further, the government has also announced to support small and large businesses with the tax refund and deferred of interest payments. The State Bank of Pakistan (SBP) has cut down the interest rates to a single digit after a long time.
It is difficult for this country to bear with all these crises, so to address the miseries; the country needs tough decision making and economic assistance from multilateral institutions like the IMF, World Bank, Asian Developing Bank and from its friends like China, US, and the Gulf Countries.
