Pakistan’s growth rate is expected to remain lower than the pre-pandemic level. The government has introduced reforms which have added to the problems of the common people and new forecasts mean there is no prospect of relief for them anytime soon and they will continue to suffer in years to come.
Pakistan’s major challenges are stabilisation and protection of the economy against external risks, rising global prices, current account deficit, rising debt servicing, and continued losses of public sector enterprise. Missed revenue collection is compounding the problem. People had started losing jobs even before the onset of the pandemic. More than 18.5 million people were estimated to have lost jobs in Pakistan in the aftermath of the pandemic, though it only imposed smart lockdowns instead of a complete shutdown. The loss of a large number of livelihoods points out flaws in the system and deep-rooted structural problems. The pandemic provides an opportunity to the country to overhaul the system to save people from the fallout of future threats.
According to a credible think tank of Pakistan, job losses from the pandemic could be more than the government’s estimates and people of the Punjab and Khyber Pakhtunkhwa could be most affected by rising unemployment. According to the Pakistan Institute of Development Economics (PIDE), the pandemic has shown that we couldn’t impose lockdown like the rest of the world has done because we lack the systems to do so. The pandemic is not the ultimate problem of Pakistan, it is just the tip of the iceberg compared to the deep-rooted structural problems that we are just not ready to face. The unprecedented negative economic growth of the country is attributable to the badly impacted services sector as well the manufacturing sector. The manufacturing sector shutdown led to a massive shortfall in exports. The informal sector- the daily labour, small and medium industry and restaurants suffered badly. As per the projections, poverty has gone up by 20-30pc. The biggest problem of South Asia is not the pandemic but the incapability of developing our economies for the 21st century, it noted.
The coronavirus has not proved as harmful to Pakistani lives as it has been in other countries but it has been more devastating for the economy and livelihoods of the people of the country than the rest of the world. Calculating losses on the basis of the impact of the restrictions on business, tax revenue, international trade and the cost of unemployment for three months when the pandemic raged last year, the Ministry of Planning had estimated that 12.3 million to 18.5 million people in the country would lose their jobs and the economy could sustain Rs2 trillion to Rs2.5 trillion losses due to moderate to severe shocks.
In a report, the Asian Development Bank (ADB) feared that between 1.5 million and 2.3 million young Pakistanis had lost jobs during the pandemic. The country’s unemployment rate, which stood at 8.9pc in 2019, is likely to hover between 17.3 and 21.5pc in the current year. According to the government’s own estimates, at least 10 million more people have slipped below the poverty line, raising the number of poor people from the existing figure of 50m to 60m. The ADB said Pakistan might have contained the loss of life and the economy but the damage was still enough to hurt its people badly.
In a report, the Word Bank said Pakistan’s economic outlook would remain fragile for at least two years, as the outbreak of the coronavirus had compounded the country’s miseries. In a report, the World Bank said domestic economic activity was expected to recover, but Pakistan’s near-term economic prospects were subdued. Given anaemic growth projections in the near term, poverty is expected to worsen. Vulnerable households rely heavily on jobs in the services sector, and the projected weak services growth is likely to be insufficient to reverse the higher poverty rates precipitated by the pandemic. Economic activity has contracted and poverty is expected to have risen, as monetary and fiscal policy tightening, earlier in the year, was followed by lockdown, it noted. The World Bank estimates a 33c increase in poverty in India and the situation is not different in Pakistan. “With government estimates of pandemic job losses at approximately 14 million, poverty is expected to increase for the first time in two decades in Pakistan. The pandemic is also expected to exacerbate Pakistan’s human capital challenges,” it noted.
Prices have risen to a level where even middle-income families are struggling to survive. Ramazan has become really hard for them as prices of all food items and essentials have skyrocketed. Inflation jumped to over 9pc in March – the highest rate in as many months – due to surge in prices of food and electricity, particularly in the rural areas of the country, the Pakistan Bureau of Statistics (PBS) reported. The inflation rate was in line with the expectations of the Ministry of Finance. The PBS stated that electricity rates were 31.5pc higher than a year ago and almost all kitchen items recorded a double-digit rise in prices, including wheat, sugar, and wheat flour. In March, wheat prices were 35pc higher, followed by a 24pc average increase in prices of sugar, wheat flour 19pc, pulses 20pc, and vegetable ghee 17pc, according to the PBS. The World Bank has projected a 9pc inflation rate for Pakistan this year, which it said could slow down to 7pc in the next financial year.
On the other hand, the government is trying to hide behind the pandemic. It claims the economy was poised to take off after three years of slowdown but the pandemic has hit people and businesses hard since mid-March 2020. However, fiscal indicators were bad even before the onset of the pandemic. The economy had slowed down, millions of people lost jobs and thousands of businesses shut down as a result of economic policies of the government. It blames the pandemic for all its failures while there was no pandemic in the country in the first nine months of the last fiscal year. The government should take serious measures to check inflation. It is the biggest issue of the people of Pakistan.