Since the coronavirus outbreak in China and the increased number of affecters reported in the neighboring countries of Pakistan and Iran. Pakistan has put in efforts to curb the reported COVID-19 cases by sealing off its border after more than 21 cases have emerged until now. With such stringent measures, an economy was strangled nearly to its death by hefty debts and bailout packages from international lenders and now halted regional trade has jolted Pakistan’s economic stability. International economic assessors, including the Asian Development Bank (ADB) reported Pakistan’s economy may suffer a loss between $16.387 million to $4.95 billion.According to the estimates made by the United Nations, the virus could cause international tourism to plunge to 3% globally and it may wipe off a country’s efforts to attract tourism.
As stock prices hit their lowest amid virus concerns, this is freezing up economic activities across the world. Which has forced the New York Federal Reserve to inject $1.5 trillion into the American financial market to prevent a repeat of the 2008 credit crunch. But in the light of the current shutdown, cash strapped Pakistan’s GDP will lose 1.57% and the fear that 0.9 million people may lose their employment has further worsened the situation. In the worst-case scenario, a country mainly based on its agricultural and mining export will suffer a $21.7 million blow. Business and trade accounts for USD 18.8 million losses; hotel and restaurants USD 2.4 million losses; light and heavy engineering USD 14.6 million losses; and transport services USD 3.4 million, would impact Pakistan’s economy said in a report.
With prevailing uncertainties in the market, Pakistan’s government has asked the State Bank of Pakistan to ease out the interest rate, and financial institutions are instructed to control the inflation that would encourage investors to do business
With the rise of coronavirus and the scaling up of uncertainties in Pakistan, which has concrete trade and production ties with China, the estimated losses may be further aggravated. Ongoing projects under the banner of the Pakistan China Economic Corridor (CPEC) would now take longer to complete, after the Chinese workers would be quarantined for at least 14 days before their entry to Pakistan. This indefinite delay is yet to bring an additional burden and expense to the country, especially during the hard time. Pakistan received a fresh grant of $6 billion from the International Monetary Fund to combat the economic challenges. Additionally, friendly countries like China, Saudi Arabia, and UAE relieved Pakistan with deferred oil payments and interest-free loans to raise Pakistan’s registered currency reserves which dropped to an alarming level of $8 billion. This could have bankrupted the country.
However, with prevailing uncertainties in the market, Pakistan’s government has asked the State Bank of Pakistan to ease out the interest rate, and financial institutions are instructed to control the inflation that would encourage investors to do business. Prime Minister Imran Khan’s economic strategies have proven helpful in the present situation, after the country geared up to boost its textile exports to EU countries, while China’s manufacturing industry is partially shut-down. Besides, EU’s preferential trade status, Pakistan has succeeded to grab more orders than usual due to its free-floating exchange rate and increasing discount rate introduced in 2019.
Hopes are high that Pakistan may sustain through the economic challenges, though yet to alleviate more. But the country should have back up plans and a responsive attitude to the situation changing with each hour.
The writer is a Journalist at Fox News Digital