This Article is an attempt to discuss the Economic Impact of Coronavirus in Pakistan. The pandemic of the novel coronavirus (COVID-19) is resulting in lockdowns, social distancing, and global economic downturn all over the world. The World Health Organization (WHO) declared COVID-19 a “global pandemic” on 11 th March 2020. The report of Asian Development Bank (ADB) asserts that the economy of Pakistan could suffer from losses in the range of $16.387 million to $4.95 billion, or 0.01% to 1.57% of GDP due to this ferocious virus outbreak. The report also asserted that this pandemic would dent Pakistan’s GDP by at least 1.57% and result in an estimated 946,000 job losses. Though the Prime Minister of Pakistan Imran Khan opposed the idea of a complete lockdown citing that it was not a plausible option provided the fact that an estimated 25% of the population lives below the poverty line and such a lockdown would make their lives miserable. Still, in the wake of ferocious transmission of COVID-19 pandemic, the federal and provincial governments have announced partial or complete lockdowns closing down all factories producing non-essential items, shops selling non-essential items, passport and NADRA offices, inter-city and intra-city transportation, wedding halls, shopping malls, cinemas, non-essential services, and congregations.
This lockdown, social distancing, quarantines, and the closure of businesses are having the most detrimental impact on low-income groups of Pakistani society which includes daily wagers (comprising 47% of Pakistani workforce), domestic workers, home-based workers, street vendors, shopkeepers, factory workers, garment and textile workers, and other workers in the undocumented economy. They are experiencing an acute shortage of resources and funds to feed their family due to closure of their workplaces, inability to pay rents, school fees of their children and utility bills. There has been an unprecedented increase in people seeking financial help due to unemployment and a shortage of money to survive. According to a recent report by the Pakistan Institute of Development Economics (PIDE), approximately 12.3 million people are expected to face unemployment under a scenario of moderate restrictions by the Government. Wholesale & Retail Trade is expected to witness the highest layoffs of ~4.55 million people.
Hence, the poverty rate in Pakistan could increase from 23.4% to 44.2%. In the province of Punjab alone, as of 28th March 2020, at least 0.5 million garment and textile industry workers have been dismissed, cited an official statement from Pakistan Workers’ Federation. The levels of inflation are skyrocketing, with a staggering average rate of 14.56% as recorded in %January 2020, the pandemic of the corona virus has further exacerbated the problem where hoarders are demanding a hefty amount of money for providing people with food and grocery items due to the demand and supply gap. In Pakistan, the social safety nets and transfer payments are inadequately funded and are a victim of corruption. The Utility stores corporation is also inadequately funded. It is expected that once the lockdown is over there will be a substantial increase in beggars and low-skilled workers, due to skyrocketing unemployment rates. Due to the lockdown and social distancing, the domestic expenditure of ordinary households has declined as people are not spending much on petrol/gasoline costs, outdoor eateries, and luxury items. The textile industry contributing 50% of the GDP and employing a significant number of employees is anticipated to suffer the most as export orders are being canceled and the overall global economic slowdown will result in a massive decline in international orders. The crippling economy of Pakistan is incapable to sustain this major dent. For the government, the most pressing challenges are saving the masses from the disease, saving people from hunger, rescuing the economy and ensuring proper management of the supply chain.
The government should, to the maximum extent of its present resources, help low-wage workers to offset the food insecurity and the intense economic hardship from this situation. The government of Pakistan has announced a PKR 1.13 trillion ($6.76 billion) stimulus and rescue package delivering direct assistance to the vulnerable and safeguarding industry and businesses. The government is planning to abolish all sorts of taxes on food items temporarily and has signaled towards a considerable reduction in oil prices. Utility bills payment has been temporarily deferred for three months for those households whose monthly bills fall below a certain threshold. A sum of PKR 50 billion ($298.94 million) has been allocated for utility stores to ensure the constant supply of food and other necessities. Overall, the ordinary citizens of Pakistan are confronted with grueling challenges of hunger, poverty, social cut off and unemployment due to this harsh pandemic.
The article “Economic Impact of Coronavirus in Pakistan” is a public opinion post by Mr. Syed Abdul Rehman, who is a qualified Chartered Accountant and a specialist in global democratic affairs, education, finance, taxation & economy. He can be reached out at [email protected]
You may further read about the Economic direction of Pakistan after COVID-19: A review in light of major economic indicators
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