Over the past few decades, the world has seen the existence of novel viruses that have posed serious threats to global health. Pakistan, with an unparalleled challenge of highly porous borders, is sandwiched between two epicenters of the deadly corona – China and Iran. With high frequencies of travel and trade between the borders, Pakistan has been at higher odds of viral transmission. The increased influx of travelers through land, air and water facilitated the spread of the virus.
In Pakistan, the coronavirus pandemic has not only posed threats to our lives but has also taken a devastating blow on our economy. Pakistan’s economy is crippling and is in doldrums, putting many sectors in crisis. Considering Pakistan’s limited financial stability and capacity to bear the costs of the pandemic, our country may in the future require assistance not only from the World Bank and the IMF but also from strategically allied powers like China and Saudi Arabia.
The COVID-19 pandemic has forced Pakistan’s already fragile economy to a grinding halt. Social distancing policies and lockdown strategies, necessary to stop the spread of the contagion, have paralyzed Pakistan’s economy and left it vulnerable without sustenance and income. The pandemic has forced most countries to break with the past and initiate new reforms, not only in the economy but also in politics, security measures and foreign policy. However, being a national security state, Pakistan continues to adhere to its existing model, since changing its security and foreign policy will require changing the power dynamics between the prevailing military and civilian political government.
Pakistan’s economic fallout, during this pandemic, has been unravelling at such a perplexing speed that even seasoned institutions and experienced individuals cannot accurately estimate the extent and level to which the pandemic will impact growth. The major victims of COVID-19 outbreak are the small & medium-sized enterprises and businesses because, in comparison to large ones, they usually do not possess sufficient resources and facilities, especially financial and managerial, and are not at all prepared for crises which are likely to go longer than expected. Pakistan’s economy is expected to suffer negative growth for the first time in the last seven decades. The government says it understands that people are suffering so no new taxes have been added to this year’s budget which is designed as completely people oriented.
Decades of globalization have created supply chains so deeply interconnected that when there are issues in Pakistan’s economy, it is felt by all the neighboring allies. Just a few days of March dragged the world’s GDP into the negative zone. This, in particular, has badly affected South-Asian economies. Many developing South-Asian countries, such as Pakistan, are exporters to consumers. The main problem here is that COVID-19 has forced consumer countries to shift their focus towards fixing their internal problems and so sales and imports in these countries have greatly declined. This has badly impacted export-oriented countries like Pakistan and their businesses.
The shock of this pandemic has affected both sides of the economy, i.e; demand and supply. The productive capacity of Pakistan’s economy has decreased. From reduced taxes and low GDP to minimal savings to low export rate, COVID-19 has wiped off all that our country gained. In Pakistan, we have seen projections but we don’t have any real time data on the economic fallout as yet.
After months of fighting a war with COVID-19, Pakistan is cash trapped, the current account deficit runs high, inflation is hitting double digits and the country is barely left with any foreign exchange reserves. Now is the time to correct the wrongs of yesterday. We need an investment strategy, proper demand and supply targets and proper tariff plans to earn what we have lost over these months.
About the writer: The writer is an English Literature and Linguistics graduate based in Islamabad.
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