(Dis)ease of doing business

The economic impact of the pandemic at the micro level is far more disturbing

The coronavirus and its scare have shaken businesses and adversely affected the health of economies worldwide. Analysts fear things might change from bad to worse because the situation is not expected to improve soon.

Pakistan has also been affected by the pandemic. The number of infected patients has surpassed 300 till the filing of this report.

Impact on Pakistan’s economy can be seen by the panic in the stock markets where trading had to be stopped multiple times because investors were bent upon withdrawing their money. Many investors fear that if they do not exit from the stock market now the value of their shares will plummet in case of a market crash.

A considerable chunk of foreign investment in government bonds etc, which is called hot money, has also flown away making a dent on rupee’s value against dollar. This has also caused a dip in the value of foreign reserves available with the government.

A lot has been written on the impact on the economy at the macro level but the fact that it has destroyed it at the micro level affecting the common man is disturbing. If daily workers, roadside labour and vendors, who have no savings, do not earn on a particular day, they do not have anything to spend. With markets and public places closed they have lost their customers.

Also read: A Pyrrhic victory?

Nauman Kabir, chairman of the Pakistan Industrial and Traders’ Associations’ Front (PIAF), tells The News on Sunday that the footprint of customers at general stores, super markets and shopping malls has shrunk by up to 80 per cent as people are buying essential items only, including edibles. The purchase of clothes, shoes, cosmetics, utensils, decoration pieces has come down drastically because people want to save all they can to survive in these testing times.

Kabir says the supply chains are affected because of movement and quarantine restrictions imposed on shipments due to which imports and exports of the country have been affected badly. He points out that a large number of containers carrying imported goods are stuck at the port and cannot be cleared because the required documents have not yet reached from China where office work remains suspended. The importers are also worried that the shipping companies and port authorities have imposed demurrages on them for delay in clearance of their merchandises. Exports have suffered similarly as destination countries are not accepting containers without following long procedures.

Impact on Pakistan’s economy can be seen by the panic in the stock markets where trading had to be stopped several times.

Some of the worst affected businesses are travel and tourism which the government has been counting on to be the engine of economic growth. These businesses have taken a hit because their survival depends on mass movement and gatherings which have been banned.

Khalid Hussain, a popular cook-cum-caterer in Lahore, says people are asking him to return their advances. He says he had upgraded his facilities and built up stocks of spices, ghee and other items in anticipation of a busy season ahead of Ramazan but now he is doomed.

In this scenario, the likely impact on job market cannot be ignored. According to a report released by the International Labour Organisation (ILO) on March 18, the impact of COVID-19 on the global world of work will be far-reaching, pushing millions of people into unemployment, underemployment and working poverty. The report that puts the figure of jobs likely to be affected by the current crisis at 25 million proposes measures for a decisive, coordinated and immediate response.

Read more: No respite for the stock market

PIAF chairman, Nauman Kabir, says this effect is visible in Pakistan where employers are finding it difficult to retain workers in the wake of sales drop and demand cuts for their products. He suggests that the masses must be told that Pakistan is an agricultural country and there is no reason of fear food shortages, otherwise panic buying and hoarding will force many to go hungry.

The UK has tried to control this situation by imposing a restriction on the quantity of essential items one can buy. Kabir also says the export of ethanol produced by sugar mills must be banned because it is used in sanitisers that are currently much needed.

The author is a staff member. He can be reached at [email protected]

Economic impact of coronavirus at the micro level is far more disturbing