Daily Times

Now the time has come for the toll the coronavirus is taking on the economy to start showing in the numbers. The authorities were braced for bad news, of course, but still the current account deficit spiking 64-fold in April to $572 million, compared to $9 million in the previous month, must have caused some concern in Islamabad. The good news is that things have still remained largely under control on the back of some growth in foreign exchange reserves. Yet news reports have rightly pointed out that the state bank is stressing on month-on-month figures at this point, rather than the usual year-on-year indicator, in order to gauge the impact of the coronavirus and the slowdown it is causing. And things are not looking good because the reserves will not take long to burn out at this rate. Hopefully things will pick up now that the economy is reopening, and this rather extreme anomaly would correct itself.

The hit expectedly came from exports (down one-fourth) and remittances (down about five per cent), which would have been largely factored in by now since both our trading partners and countries where the most Pakistanis work are suffering to no end. Now our best bet is the G20 debt moratorium coming through sooner rather than later and other international creditors doing a little bit of the same, if not writing off some of the debt altogether as the prime minister has been demanding for a while. Otherwise going forward will bring more such problems, especially as employment and poverty numbers begin to worsen.

It’s not as if Pakistan is alone in this predicament. Literally every country is struggling with economic policy because the whole world has entered a deep recession. Pakistan can and will have more serious problems than some other countries, especially if the virus is without a cure for too long, because of the small size and indebted nature of its economy. Yet whatever happens it’s already pretty clear that the future is going to be different than the immediate past. Not only will people have to learn to live with the virus, countries will also have to adapt to weaker growth and the challenge of keeping people fed when there are no jobs. For the time being, though, nothing will be more important than keeping a close eye on the numbers, and tweaking the economy accordingly while there is still the fiscal space to make some timely adjustments. *