简体中文
By APD writer IMDAD HUSSAIN
Pakistan’s economy a few weeks back was moving forward on a promising note as exports and remittances were picking up and supporting the growth momentum.
According to a reported briefing about the economic situation, in December 2019, Pakistan’s large-scale manufacturing output expanded 16 per cent month on month basis reflecting upward trend in growth.
This positivity led the IMF and Pakistani authorities to reach a staff level agreement that paved the way for the IMF board to release the next tranche of US $450 million in April.
Advisor to Prime Minister Finance & Revenue Dr Abdul Hafeez Sheikh also highlighted that due to Federal Board of Revenue’s stronger revenue collection the government had achieved a primary surplus of 0.6pc of GDP (Rs 286 bn) in the first half of the FY2020, the first time in over 10 years.
The non-tax revenue collection during the first half of FY2020, he announced, had also gone up by 170pc on year-on-year basis to reach Rs876 billion (Rs323 billion in the same period last year) which would help reduce the build-up in debt; as the government already paid off over Rs 5 trillion domestic and international debt.
Until the Coronavirus broke, Pakistan’s economy was gaining momentum with exports, stagnant for over a decade, showing hopeful signs while current account deficit and trade gap making remarkable improvements also as a result of monetary tightening and inflation appearing to take reverse course.
However, with more than 425,000 confirmed cases of COVID-19 worldwide, businesses are coping with lost revenue and disrupted supply chains as factory shutdowns and quarantine measures spread across the globe, restricting movement and business activity.
As the world grapples with the coronavirus, the economic impact is mounting - with the G20 Finance Ministers and Central Bank Governors having a conference call on 23 March to discuss how to address the emergency.
The International Monetary Fund's Managing Director Kristalina Georgieva issued a statement following the call, in which she outlined the outlook for global growth: "For 2020 it is negative - a recession at least as bad as during the global financial crisis or worse."
But she added: "We expect recovery in 2021. To get there, it is paramount to prioritize containment and strengthen health systems - everywhere."
The Organization for Economic Co-operation and Development warned on 23 March that the shock from the virus is already bigger than the global financial crisis.
Earlier, the United Nations Conference on Trade and Development, the UN trade agency, warned of a slowdown of global growth to under 2 per cent this year, effectively wiping $1 trillion off the value of the world economy.
Pakistan under the circumstances is not going to be an exception as Asian Development Bank in its report has said that Pakistan’s economy could suffer a maximum of 1.57 per cent of the GDP on account of agriculture, business and trade, tourism and health in case of an outbreak of the COVID-19 in the country.
However, it says that the impact is estimated to be between $61 million and $16.23 million depending on how the situation evolves ranging from the worst to the best possible scenario.
The report further states that in hypothetically worst scenario of COVID-19 significant outbreak within the country, Pakistan could suffer $4.95 billion losses including $1.56 billion in the agriculture, mining and quarrying sectors, $1.95 billion in business and trade and $1.5 billion in manufacturing, transport and hotel services.
Meanwhile, Pakistan government in an effort to counter the divesting effects of the coronavirus pandemic on the economy has announced a financial-relief package of over $6 billion including $1.26 billion aid that would go as payments to laborers and cut its benchmark interest rate for the second time in a week from 13.25 per cent to 11 percent.
The move comes as countries around the world intensify measures to rescue their economics in the face of dramatically reduced demand due to the coronavirus pandemic.
Other measures included a $630 million tax rebate for the export sector, with a similar amount to be set aside to aid small and midsize businesses and the agriculture sector in addition tO monthly financial support for low-income families for the next four months while a separate package for the construction industry is being announced shortly.
On the other hand, Pakistani officials are of the view that negative impact of COVID-19 has increased Pakistan’s economic difficulties and it is likely to face problems in meeting the IMF targets.
Pakistani economic managers are already taking stock of the economic impact of coronavirus and economic recession at the international level on the country’s economy.
It is expected that the IMF Executive Board would approve relaxation in Pakistan’s targets as a detailed document regarding downward revision of targets including taxes would be presented to the IMF.
Hopefully, as the ‘Iron Brother’ has raised hopes of overcoming the deadly pandemic in 8-12 weeks, if Pakistan, learning from the Chinese experience, arrests the spread of COVID-19 its economy may escape the true impact of the pandemic.
Moreover, in view of Pakistan’s less than desired exports and abnormal trade balance world recession may not impact country’s economy much!
(ASIA PACIFIC DAILY)
