COVID-19 effects: Pakistan estimates 0.8 to 1.3pc loss to GDP growth

ISLAMABAD: Pakistan has made assessment of COVID-19 pandemic affects on the country’s GDP growth ranging from 0.8 to 1.3 percent and decided to prepare action plan for social/economic fronts in consultation with the World Bank (WB) to mitigate negative impacts.

The Planning Commission assessed that Pakistan’s GDP growth would face effects of COVID-19 in the range of 0.8 to 1.3 percent so Pakistan’s GDP growth would be standing at 2 to 2.5 percent against earlier envisaged target of 3.3 percent for the current fiscal year.

Pakistan’s real GDP growth rate target will be revised downward so all other macroeconomic targets will have to be re-adjusted.

When contacted, Deputy Chairman Planning Commission Mohammad Jehanzeb Khan said, “COVID-19 pandemic has rattled global markets and real economies with breakneck speed. The impact has also adversely affected emerging markets, including Pakistan. Affects of the virus will be wide ranging, fromdepressed international trade, lower foreign remittances, suppressed GDP growth to reduction in government’s revenues (and increase in expenditure) and impact on the real economy which will lead to high unemployment figures. While it is hoped that the virus may be contained in the foreseeable future, economic impact is likely to reverberate well beyond the short-term horizon.”

An important meeting was held on Thursday here at the P-Block on video conference in which the ministries and donors’ representatives participated. The top official said that the UNDP resident coordinator was assigned to coordinate with different UN agencies and multilateral as well as bilateral donors with the mandate to come up with exact losses incurred to Pakistan economy. “The UNDP shared detailed report with Pakistani side on Thursday during this official meeting for identifying social and economic sector having far reaching negative impact on the economy of Pakistan,” said the official sources.

The World Bank high-ups also presented initial work to identify sectors for preparation of action plan for mitigating social and economic framework.

During the meeting, the sources said that one member of Planning Commission raised objections that why multilateral donors were assigned to prepare action plan for Pakistan’s economy in the presence of Planning Commission and its research arm, Pakistan Institute of Development Economics (PIDE), despite possessing plenty of economists, specialists and researchers belonging to all fields. However, one official replied in the meeting that the donors’ endorsement was necessary indicating that Islamabad intended to seek more foreign loans from donors to overcome its economic woes.

The official said that the National Coordination Committee (NCC) constituted by the government had assigned the deputy chairman Planning Commission to assess exact economic and social loses caused by the outbreak of coronavirus in the country. The Planning Commission summoned meetings of all ministries/divisions and attached departments as well as provinces to come up with their expected losses. On the sidelines, they asked the UNDP to coordinate with UN agencies and other multilateral and bilateral donors to make their own assessment. Now the Planning Commission and UNDP have prepared their reports so the government will reconcile these estimates.

The Planning Commission high-ups presented the GDP losses in the range of 0.5 to 1.3 percent, but the authorities termed the 0.5 percent losses estimates as “conservative and bureaucratic” and stated that the losses were obviously on higher side. They estimated that the losses on GDP front stood in conservative estimates in the range of 0.8 to 1.3 percent at least and its effects would also continue impacting the GDP growth for next fiscal year as well so the next year’s projected target would be slashed down.

It is assessed that the manufacturing, international and retail trade, agriculture and services sectors would be impacted negatively over next six months at least. The representative of UNDP presented detailed report of 65 to 70 pages stating that they had set up a secretariat in their office for coordination with donors for assistance to Pakistan to overcome the challenge of COVID-19 pandemic. Now the WB is expected to share its action plan for socio-economic front probably next week.