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Coronavirus – Impact on Pakistan’s Economy

Coronavirus impact on economy

The spread of corona virus is now a global event that is affecting every living human being. Corona virus is a highly contagious that spreads from person to person droplets in the air or when a person touches any object that is already touched by Corona patient. Till now, over 6.8 million people have been infected worldwide and confirmed deaths are more than 397 K (this count increases day by day). These statistics clear that this pandemic becomes more catastrophic than the Second World War. To limit the spread of corona virus, social distance is the only way. To ensure social distance, there is no way other than lock down of cities and villages alike. If a lock down is not initiated, there is a risk of massive infection rates which can cause of huge number of lives loss. But on the other hand, lock down has great negative impact on economy and it threatens the livelihood of the poorest segments of the society.

The economic impact of corona virus on Pakistan’s already fragile economy could be even worse than that of the Great Depression. As the government, public, private businesses, civil society face the pandemic situation across the country, an important debate has started regarding the degree to which the Covid-19 might impact the Pakistan economy. In 2020, global GDP could be fall by 3% as per IMF expectations. The global trade’s volume could shrink by up to 32% and 195 million jobs globally could be lost as per ILO. These numbers show that global economy including Pakistan took a big hit. Suddenly, all livelihood opportunities have been squeezed. Small and medium businesses, traders and daily-income earners are greatly impacted by lock down situation. The subsequent fall in the GDP and the lock down can raise the national unemployment rate up to 14%.

One of the major negative impacts of corona virus is the movement of imports and exports has been disturbed. Pakistani importers and exporters are unable to process their orders as movement of goods and cargo is blocked. Payments from previous orders have also been halted as Europe and U.S have been shut down. As lock downs have shut down mostly major cities globally, so imports cannot be completed and there is extremely difficult to maintain the flow of business. The government encourage to work from home, but this model can work only for IT services. “Work from home” model is not ideal option in case of trading as trade involves tangible goods for which human presence is necessary. In Pakistan, there is a large number of companies which heavily rely on imports for running successfully. Commercial importers will suffer complete stoppage or long delays of goods while industrial importers will have to stop because raw material is not available. Ultimately, the shortfalls in revenue will result in salary cuts or job losses. According to Pakistan Institute of Development Economics, there will losses of jobs in millions, specially for daily wages earners and for semi-skilled people.

The Federal Government has been implemented an overall relief programme of Rs 1,200 billion. The government announced that Rs.1200 per family will be transfer between 12 million households. The State Bank of Pakistan has announced special subsidized credit programmes for private businesses to maintain workers over the next three months. The State Bank of Pakistan also has approved aid to hospitals and medical centers for the procurement of apparatus to handle Covid-19.

We all pray for an early recovery.

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