Daily Times

Pakistan economy enfolds the prolonged history of rapid economic lapses, energy crisis, Kashmir issue, security concerns, health crisis and befall of crisis over crises with the major base line of political polarization and poor governance structure and system dynamics. Pakistan economic situation both in short and long term is parallel to Coronavirus patients put on ventilator. The Covid-19 is not limited to human-to-human transmission but it has wider spectrum. It not only attacks the human body with week immunity levels and considered deadly for the weak and elderly indeed the situation is quite similar at economic fronts where underdeveloped nations and especially those on economic ventilators will have irrecoverable damages and losses. According to official estimates, Pakistan economy will incur initial economic loss amounting to Rs.1.3 trillion since the outbreak of Covid-19.

According to the Planning Commission of Pakistan, the size of nation’s GDP is currently Rs.44 trillion and the one-fourth will be Rs.11 trillion and the expected disruption due to Covid-19 is at minimum 10% losses in the last quarter (April-June 2020) that amounts to Rs.1.1 trillion at minimum. It’s not Pakistan alone experiencing the economic shocks both fiscal and monetary imbalances indeed the developed economies like US, European nations, Japan and upon surprise even China caught fire of the spiral and incurred $2.7 trillion in lost output. As Covid-19, originating from Wuhan, China initially considered, as epidemic now turned into global concern after its massive spread and classification as pandemic that has certainly made human civilization shift towards new normal.

If the situation persists and pandemic lasts longer it is quite certain Pakistan economic fronts will be doomed to collapse as by May 2019, Pakistan Rupee had already experienced depreciation of 30% against the US dollar. Moreover, there was addition of debt amounting to more than $13 billion that is more than 40% of the debt in the last decade. Furthermore, the inflation rate in Pakistan accelerated to 12.93% which showcase the alarming bell for more price hikes in the future despite the income levels of middle to lower income groups will remain constant or either decreased due to uncertain environment amid Covid-19. Pakistan is an agro-based economy and entails the potential not only to meet the national food requirements indeed of neighboring countries but with the price rise of essential food items wheat and sugar results imbalances in supply and demand and most importantly the major concern of inflation.

Apart from this, the inhumane and hostile move taken by Indian Prime Minister Narendra Modi in Indian Occupied Kashmir on August 5, 2019 by having complete lockdown up until today is of major concern that further aggravated the tensions between India and Pakistan. Likewise, Pakistan government has so far failed to bring any fruitful justice for people of Kashmir and the eastern and western borders because of high security concerns is an added cost for the poor government.

Moreover, besides the Covid-19 global crisis and security crisis Pakistan is suffering from investment crisis as well as most of the industries are shut due to certain government policies, Covid-19 and Pakistan being in FATF’s grey list. Moreover, after the rising death counts due to Covid-19 there is massive emphasize on lockdown. According to FBR estimates, the lockdown in Pakistan is going to incur major revenue losses. For instance if the current situation lasts till June 2020 the tax losses could amount indeed exceed to Rs. 380 billion. Moreover, the advent of practicing social distancing lead to financial damages not only to individuals but also at the national level.

Pakistan should take Canada as a role model and revitalize the existing industries by manufacturing the medical supplies and its relevant items to treat and protect Covid-19 patients and keep economy moving forward to overcome the economic losses

On the other hand, Pakistan will also suffer from further negative trade imbalances. According to the Federal Secretary of Commerce, the export sector might experience economic losses from $2-$4 billion as most of the export orders got cancelled and majority of the Pakistan export sector is dependent on the textile sector that is dependent on China for its basic capital good inputs that is suffering due to Chinese lockdown. The tourism sector, which just started the kick-start for Pakistan exports, also experienced losses as global tourism dropped by 3%. Likewise, the import would also be shrink due to fall in POL prices and quantity.

In order to conclude, it is of no surprise pandemic is shock to both demand and supply. Therefore, this catastrophic situation provides the much need push for the future with opportunity in challenging times to set the priorities straight for the right time and place. The Covid-19 ultimately demands for both developing and developed economies to work more effective health care system and extensive research and in-depth exploration for vaccines to counter such pandemics in future. Pakistan should take Canada as a role model and revitalize the existing industries by manufacturing the medical supplies and its relevant items to treat and protect Covid-19 patients and keep economy moving forward to overcome the economic losses. This is the right time to promote “Made in Pakistan” vision a reality.

The writer ia (Advisor (Pakistan Institute of Management, Lahore operated under Federal Ministry of Industries and Production, Islamabad) and Foreign Research Associate (Centre of Excellence, China Pakistan Economic Corridor, Islamabad).