Saddam Hussein
COVID-19 happens to be a double-edge knife. On one hand it’s affecting people’s health directly and triggering economic slowdown on the other hand. Pakistan’s situation with regard to the spread is relatively better than most of the nations’. But the clock is ticking. The administration of Prime Minister Imran Khan is in a catch-22. If it eases the lock-down, the second wave of the virus may hit harder and if not, people would die of hunger and growth nose-dive. Hence disastrous ripple effects across the all sectors of economy would start seeping in.
The government has recently relaxed restrictions on businesses and people’s movement leading to a limited economic activity in the country but negatively impacting the coronavirus spread. Pakistan has seen a spike in both number of virus positive cases as well as deaths. The nationwide lockdown, Premier Khan had imposed ‘ reluctantly’’, cut domestic demand significantly and disrupted trade and tourism. The major concern for Pakistan like any developing country with a fragile economic outlook is the vulnerable segment of the society — POOR PEOPLE.
The argument is many of them may not die of the novel virus but will ultimately be victims of starvation in case of a longer lockdown. So, what’s next?
The silver lining is that the developing economies are expected to start picking up from next year after the virus-driven sharp decline. They, for sure, need to do something to stay afloat till then.
The Asian Development Bank in its latest report estimates the region’s 2.2 percent growth in 2020 from its September’s 5.5 percent forecast. On hope of an end to outbreak and resumption of economic activities, it will rebound to 6.2 percent in 2021.
Uncertainty, however, towards future persists as nobody knows what shape the global pandemic will take tomorrow. The bank’s chief economist Yasuyuki Sawada fears the economic recovery can be slower than being currently forecast. This demands strong and coordinated efforts to contain the pandemic and minimise its economic impact, especially on the most vulnerable.
The South Asia’s second biggest economy, Pakistan saw some pre-coronavirus growth after securing $6.6 billion loan package from the International Monetary Fund last year. The exports had begun improving, foreign investment trickling in in the capital market and foreign exchange basket filling. Now, the IMF sees negative 1.5 percent gross domestic product this fiscal year end on June 30. While approving $1.4 billion under the Rapid Financing Instrument in April, the Fund said Pakistan’s growth is being ‘ severely” affected and external financing strained due to the domestic containment steps and the global downturn.
It’s kind of double jeopardy for an arid nation that its main crops — wheat, cotton and rice — are expected to be damaged by the worst locust infestation in over two decades. Agriculture production will be low during current fiscal year and modest growth be recorded in some export-oriented industries, such as textiles and leather. Large-scale manufacturing, which provides over half of industrial production, will contract, as it did in the first half of FY 2020. The current account deficit will be 2.8 percent of GDP mainly due to imports contraction and rupee depreciation.
Given this tough situation, there is a window of opportunity as always available in any crisis: Utilise digital space. The transformation towards digitisation now seems to be happening much sooner than expected. People are more interested in online stuff like banking, studies, trading and various management and administrative operations because of the lockdowns. The government whose main focus is now to save economy with foreign lenders’ money and relief packages, the digitalisation can help netting Pakistan’s undocumented and informal economy.
To conclude, nothing can be anticipated much at this point of time. This is a challenge of different nature that humanity is facing after a very long. It is an ever-evolving situation. This necessitates proper mapping and data-monitoring on the basis of regular intervals, so that appropriate steps could be taken timely with minimum damage done.
The author Saddam Hussein is a Development Economist, while he serves as a Research Fellow at Center for Research and Security Studies (CRSS), and Program Officer for CRSS’ sister organization – Afghan Studies Center, Islamabad. He tweets @saddampide.
