Pakistani authorities seem to be now finally waking up to the growing danger of coronavirus which has claimed over 5,000 lives so far across the world, infected over 132,000 people and rattled stock markets world over while the magnitude of its global economic impact has yet to come.
President Donald Trump has declared ‘national emergency” after imposing travel ban from the Europe minus the United Kingdom to stop the spread of the disease into his country. Just next door in Canada, the wife of Prime Minister Justin Treadu tested positive for the disease. Pentagon has imposed domestic travel restrictions for defence department employees. Entire Italy has been in lockdown for several days while France has also reported 800 cases. German Chancellor Angela Markel has warned that two-third of his countrymen may have caught the disease, thus highlighting the daunting task faced by the developed countries to contain the pandemic after the World Health Organization (WHO) announcement that Europe has now become epicenter of the pandemic.
The situation in Pakistan till now is not alarming as just over a two dozen people have been diagnosed with the COVID-19 virus in the country so far but its outbreak in large scale could not be ruled out, particularly because the country shares borders with China, which was the birthplace for the deadly disease, as well as with Iran, which reported most deaths after China before it was taken over by Italy.
This proximity to the two major countries hit by the deadly virus reporting high death toll should have rung alarm bells in Pakistan but authorities failed to devise a coordinated policy for all over the country to deal with the deadly disease until the WHO announced that it had become pandemic.
It was just the Sindh provincial government which took the timely measures to confront this endemic.
On Friday, Prime Minister Imran Khan chaired a meeting of the National Security Committee to deliberate on the emerging situation. After the meeting, which was also attended by the military leadership, it was decided that the educational institutions all over the country would be closed until April 5 and the borders with the western neighbors – Iran and Afghanistan – would be closed. Large gatherings like weddings have also been banned for two weeks.
Earlier, the Pakistan Cricket Board also slashed matches for the PSL tournament and foreign players participating in the game were given option of leaving the tournament and returning to their countries if they desired so.
The stock markets across the world have been battered as the disease went wild across the developed nations in Asia, Europe and Americas.
Pakistani accounts for a tiny fraction of the global economy but the Pakistan Stock Exchange (PSX) lost 2,100 point at the start of trading at the beginning of last week for a number of reasons particularly coronavirus disease. The trading was halted thrice in the week to let the market recover. It regained the lost ground to some extent as the benchmark KSE-100 index was back in the positive zone at market close on Friday.
The foreign investors were reported to have pulled out one-sixth of their investments, commonly called “hot money”, in the Pakistani debt market equaling around $800 million in a span of 12 days because of the coronavirus disease.
The massive withdrawal of the foreign investment put pressure on the local currency, resulting in a sharp upward trend in the US dollar value.
It is too early to give any estimate for the coronavirus impact on Pakistani economy as situation is still unfolding but it could not remain unaffected regardless of its size and contribution to the world economy.
But the situation is not totally gloomy for Pakistan. The oil price war between world’s two major producers – Saudi Arabia and Russia have brought down the international prices to a record low since 1990s that would result in bringing down the inflation.
The government must take a sigh of relief in low inflation but a significant reduction in fuel import bill should be followed with concrete measures to spur growth and stimulate economic activity in the country to create job opportunities. The government revenues, however, may be hit by the drop in oil prices and the government can ill-afford this reduction in the wake of its commitment to the IMF for achieving an ambitious revenue target.
Moreover, it should also help in bringing down interest rates that would allow the private sector to borrow more money from the banks for investment purposes. It would be the major test for the government to implement its investment policy to lure more private investment in the country.
The economic team of the government should work overtime to assess the losses that could be inflicted on the country’s economy because of the coronavirus which is still unfolding.
The United Nations Conference on Trade and Development has included Pakistan among the world’s 20 economic which would be most affected because of slow down in the China’s economy in the wake of the novel virus. The slowdown in the China’s economy would result in a decrease of $50 billion in the world’s exports.
Pakistan’s textiles and apparel industry is likely to be affected in this regard and according to initial estimates the textile industry has suffered losses worth $40.4 million in exports because of slowdown in China.
The government, though, has woken up to an imminent danger quite late but it seems that much of its attention has focused on how to prevent it becoming an epidemic for the country.
Though one could not dispute that the first priority for the government must be to save human lives and take all possible measures to stop it from becoming an endemic for the country but it needs to look into the economic impact of this disease and draw up a strategy to minimise economic losses as much as possible.