Coronavirus: The economic situation in Pakistan

0
132

The spontaneous change in the life of human kinds comes through the pandemic called COVID-19. Approximately 7.8 billion world populations’ feels threatened and larger confined at home. In many parts of the world borders are closed, trade stops, hotels, businesses shut down, churches, mosques, learning institutions close, stock market crashes, economic collapse, etc. The government takes unprecedented measures to stop the spread of coronavirus. The pandemic first outbreak in Wuhan, Hubei Province, China, in December 2019. Later on, it spread around the globe and on 30 January 2020 the World Health Organization (WHO) declared the Public Health Emergency of International Concern on and recognized it as a pandemic on 11 March 2020.

China’s experience so far shows that the right policies make a difference in fighting the disease and mitigating its impact. Most people infected with the COVID-19 virus will experience mild to moderate respiratory illness and recover without requiring special treatment. Older people and those with underlying medical problems like cardiovascular disease, diabetes, chronic respiratory disease, and cancer are more likely to develop serious illness. Coronavirus disease spreads primarily through contact with an infected person when they cough or sneeze. It also spreads when a person touches a surface or an object that has the virus on it and then touches their eyes, nose, or mouth. Simplest protection from coronavirus is to wash your hands frequently, avoiding touching your face, and avoiding close contact with people who are unwell.

This pandemic doesn’t only affect your social life but it really impacts the state economy. Some authors believe that this pandemic is even worse than the great depression which was happened between 1929-1933. The implication of coronavirus on Pakistan economy specifically, real impact on the future progress of the government. Let’s discuss the case study of Pakistan that coronavirus has become a threat to the pace of development.

Pakistan reported its first case of COVID-19 on Februrary26. Majority of the cities are partially lockdown but due to the 18th amendment which gives autonomy to the province, the central and provinces are not in one page on the lockdown. The prime minister of Pakistan Imran khan several times raises the fear that more people can die with hunger instead of the corona. He also said that we cannot feed 220 million people for a long period of time. However, the government also announced 200 billion rupees for the daily labour class in which 10 million people will get a lump sum amount. Planning Ministry has estimated that due to coronavirus pandemic it is expected that 12.3 million to 18.5 million people will become jobless. On the other side, the government is also determined to increase business activities despite virus fear.

The federal government has announced to support funds for the businesses which include Rs. 100 billion. The provincial government is also preparing the relief package. As Pakistan budget is already in debt and Pakistan financial capacity is very small to fight against this pandemic. So Pakistan will need financial assistance from the world institutions such as IMF, world bank etc. but regarding this, Pakistan received a piece of good news on April 16 when the International Monetary Fund approved US$1.4 billion under the Rapid Financing Instrument to address the economic impact and fight against the COVID-19. Furthermore, the IMF and World Bank also announced to give one-year breather for Pakistan paying back loans.

Due to the pandemic budget deficit expected to rise to the highest peak in the history of Pakistan. Pre COVID-19 it was projected at 7.3% of gross domestic product (GDP) but after this pandemic, it is expected to increase up to 9.2% of its GDP. The inflation rate is also expected to remain at 11% this year.

As the government takes strict measure to make possible not to spread coronavirus but transporters specially goods transportation who play a key role in the state economy facing a lot of hurdles and problem but governments also have relaxed certain restrictions on transporters to ensure a smooth supply of essential items in the country. However, they are facing problems on the highways. According to the report, goods transportation activities have declined up to 80% as hostelling and workshop facilities on highways remain suspended amid the lockdown. Goods Transporters complain of various issues such as the health issues, from lack of basic facilities on highways to rising transportation prices, as well as a labour shortage as this is one of the big issues that due to the lack of labour and restrictions the supply chain affected. Although, Prime Minister has taken action regarding this issue and order that goods transporters’ concerns be resolved so that there should not be any issue regarding the supply chain.

According to the Asian Development Bank (ADB) report, it’s stated that the virus outbreak could cost Pakistan economy in the range of $16.387 million to $4.95 billion, or 0.01 % to 1.57% of Gross Domestic Product.

In the Asian development bank report which was published on March 6, explains both the best, modern and worst-case scenario regarding the pandemic outbreak. As per the report the “best-case scenario”, the loss would be $16.23 million, of which Pakistan’s agriculture and mining sectors could sustain a loss of $5.5 million, business trade, personal and public service a loss of $5.54 million, hotels and restaurants a loss of $0.67 million, light and heavy manufacturing a loss of $3.6 million, and transport services incur a loss of $0.92 million. In the “moderate-case scenario”, the projected loss that Pakistan may suffer is estimated to be $34.2 million. In the worst-case scenario, ADB estimates Pakistan to suffer a loss of $5 billion, of which $1.5 billion loss will be incurred in the agriculture and mining the sector, $1.94 billion in business and trade, $253.7 million in hotel and restaurants, $671 million in light and heavy engineering, and $565.6 million loss of transport services. The report also highlights that this loss would plunge Pakistan’s GDP by at least 1.57 per cent and trigger 9, 46,000 job losses. The Asian development bank also releases $50 million for Pakistan against the fight with the pandemic.

Furthermore, the United Nation also estimates the effect of COVID-19 on the tourism industry. International tourism to drop 3% due to virus resulting in a loss of $50 billion globally, which is another bad news for Pakistan tehreek-e-insaf government which is, committed to increasing tourism exports. Same case in the Aviation industry that Pakistan International Airline (PIA) loss almost Rs12.50 billion during the initial period.

Due to the pandemic, the investors fear from the crash of stock exchange and economic growth and it is also the reality that especially in Pakistan the investors have always concerns on the government policy and they also believe that the government action may not enough to stop the decline. But for their concern, the central bank like in Pakistan state bank decrees the interest rate from 11% to 9 %.

It is also a fact that some Businesses just like online stores and delivers services reported a huge demand from the customer due to the lockdown and fear from the outside. Another important thing is due to the lockdown not only in Pakistan but around the globe the pollution drop-down continuously.

In the global world coronavirus question the credibility of the world superpower and first world countries as they are militarily so strong but in the basic health facilities, they lack. There have been widespread reports of shortages of pharmaceuticals, ventilator, mask, protective dress, health facilities etc. even third world state just like Pakistan faces this sort of issues but due to this pandemic first world countries are exposed regarding the health facilities. As the coronavirus spreads around the world, the stock markets have experienced their worst crash in the 21st century. Many states in the globe with large economies, such as Italy, the US, Spain, have enacted quarantine policies. This has also led towards the disruption of business activities in many economic sectors. Global conferences, events, fashion shows, and sports are being cancelled or postponed. Major sporting events were cancelled or postponed, including the 2020 Summer Olympics in Tokyo, which was postponed until 2021.

The pandemic has impacted the productivity of science, space and technology projects, and to the world’s leading space agencies – including NASA. The pandemic really affected the educational sector worldwide, which leads towards the closures of schools and universities. According to the UNESCO, school and university closures due to COVID-19 implemented nationwide in 165 countries. This affects around 1.5 billion students worldwide.

As the statistics show that the outbreak of pandemic really affect the Economy not or the short time but its impact remains there for a decade to sustain again especially for the under-developing country like Pakistan, where the economy is already in its downfall and conditions, are worst it took a long time to come in the sustainable line.

This pandemic is an invisible and unknown enemy. We all have to fight with determination and hope and to win this war we have to follow the precautions and keep social distancing and wear the mask.