SBP sees restriction steps may have negative impact on Pakistan’s economy
According to the World Bank’s latest Global Economic Prospects, in 2020 the global economy is on track to shrink by 5.2 percent amid the COVID-19 pandemic, the deepest recession since the Second World War. The Report also noted that the outlook for global economy is highly uncertain and downside risks are predominant, counting the possibility of a more protracted pandemic, financial upheaval, and retreat from global trade and supply linkages. Furthermore, the economic activity in advanced economies in 2020 is anticipated to contract 7 percent as local demand and supply, trade, and finance have been harshly disrupted.
| Demographic Indicators Of Pakistan | |
|---|---|
| Indicator | 2018 |
| Total population | 212.82 Million (Approx.) |
| Population growth rate | 2.4% |
| Contraceptive prevalence rate | 34.2% |
| Unmet need of family planning | 17.3% |
| Total fertility rate | 3.6 |
| Crude birth rate (per 1000) | 25.2 |
| Source: NIPS, Pakistan Demographic and Health Survey 2017-18, Ministry of Planning, Development and Reform | |
According to the Report the US economy in this year is projected to shrink by 6.1 percent. Meanwhile the emerging market and developing economies (EMDEs), are predicted to contract by 2.5 percent in 2020, their first contraction as a group in at least 60 years. The economic activity in Latin America and the Caribbean, in particular, could plunge by 7.2 percent in 2020. Statistics showed that growth in East Asia and Pacific is projected to decline to 0.5 percent in 2020, the only region that could see growth in 2020. The Chinese economy is predicted to rise by 1 percent in 2020. Economic experts also revealed that a downside condition in this year could lead the global economy to shrink by as much as 8 percent, followed by a sluggish recovery next year of just over 1 percent, with output in EMDEs contracting by almost 5 percent in 2020. It is also important to note that in the previous Global Economic Prospects report released in January, the multilateral lender projected global economy to increase by 2.5 percent in 2020.
The International Monetary Fund (IMF) in mid-April, projected in its World Economic Outlook that the global economy is on track to contract by 3 percent in this year as a result of the pandemic, and has presently signaled it would probable more cut forecasts in the near future. Statistics also showed that the World Bank’s semiannual forecast for the global economy predicts a moderate recovery in 2021, with growth of 4.2 percent under the baseline forecast, which assumes that the pandemic recedes sufficiently to permit the lifting of domestic mitigation measures by mid-year in advanced economies and a bit later in EMDEs, and that adverse worldwide spillovers ease during the second half of the year. On the other hand advanced economies are predicted to increase 3.9 percent in 2021 and EMDEs could bounce back by 4.6 percent. According to the report in many countries, deep recessions triggered by COVID-19 will probable weigh on potential output for years to come. The per capita incomes the report also noted; are predicted to decline by 3.6 percent, which will tip millions of people into extreme poverty in 2020, the pandemic is threatening to push over 60 million people into extreme poverty in this year.
The World Bank also stated in April that the international lender is mobilizing up to US $160 billion over the next 15 months to support countries fighting the COVID-19 pandemic. The World Bank also urged governments to take steps to alleviate the adverse impact of the crisis on potential output by placing a renewed emphasis on reforms that can boost long-term growth prospects.
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Lockdown impacts economy
According to the State Bank of Pakistan (SBP), a rise in the time span of initiatives taken to curtail the coronavirus pandemic spread in Pakistan will harshly impact the economy in future. The impact of COVID-19 can be likened to any other calamity, in the sense that there is a sudden disruption followed by a wave of reconstruction and recovery, and then normalcy. Instead, due the disruption caused through this prevailing virus in Pakistan, restaurants and shopping malls have remained closed, and all economic activity has been severely scaled down. According to SBP, uncertainties also abound over the time when the lockdown would stay in place. The longer the initiatives are in place, the more the severe the impact will be on the economy. The funds will be spent on healthcare and vulnerable households, while overall economic strategies will be fixated on business survival than growth. SBP officials warned that the extensive prevention measures against this virus would negatively impact the economy of Pakistan.
| Country Wise Net FDI In Pakistan ($ Million) | |||||
|---|---|---|---|---|---|
| Country | 2015-16 | 2016-17 | 2017-18 | Jul- Jun FY19 (R) |
Jul-Apr FY20 (P) |
| China | 1,048.30 | 763.2 | 1,311.90 | 130.8 | 877.8 |
| UK | 151.7 | 215.4 | 304.6 | 185 | 100.9 |
| USA | 15.7 | 45.7 | 161.7 | 88.1 | 87.4 |
| Hong Kong | 187 | 123 | 183.6 | 171 | 163.5 |
| Switzerland | 59.5 | 101.7 | 78.5 | 21.2 | 45.9 |
| U.A.E. | 114.6 | 120.1 | -4.4 | 103.7 | -31.1 |
| Italy | 105.4 | 61.5 | 56.6 | 51.9 | 49.2 |
| Netherlands | 29.9 | 457.6 | 100.3 | 69 | 108.5 |
| Austria | 42.7 | 21.7 | 27.4 | 7.6 | 3.8 |
| Japan | 35.4 | 57.7 | 59.8 | 117.3 | 51.4 |
| Turkey | 16.9 | 135.6 | 29.8 | 73.8 | 22.7 |
| Others | 585.8 | 303.4 | 470.5 | 343 | 801.4 |
| Total | 2,392.90 | 2,406.60 | 2,780.30 | 1,362.40 | 2,281.40 |