CORONAVIRUS - The situation in Pakistan

Will the World and Pakistan's economy will get become stable after the severe impact on economy. Will we survive with normal life after covid-19?

1. General situation

It can be said with certainty that Pakistan is witnessing the start of the dreaded second wave. The number of new COVID-19 cases continue to rise in Pakistan, for 4 consecutive days last week the number of daily new cases topped more than 3,000 per day. November saw more than 50,000 new positive cases. In the last 24 hours 2,829 new cases and 43 deaths were reported which indicates a definite spike in COVID-19 numbers since the last three months. Total number of reported cases since the beginning of the outbreak has reached 395,185 with total death toll reaching 7,985. The government has announced new preventive and precautionary measures to counter the resurgence of COVID-19 cases in Pakistan by imposing 50% work-from-home rule for workers in both public and private sector organizations, a fine of PKR 100 for failing to wear a mask in public places and a ban on all indoor gatherings of all kinds. The government has ordered all educational institutions to be closed from Nov 26 to Jan 10, 2021. The institutions will ensure online education till Dec 24, whereafter winter vacations will start. The largest city in Pakistan, Karachi, has imposed targeted micro-lockdown in various localities in the city.

The COVID-19 positivity rate in Pakistan by the start of last week stood a highest level of 7.46% since the start of the pandemic nine months ago. The positivity rate in some bigger cities like (Karachi, Hyderabad) has crossed 19% while Islamabad is not far behind at 7%. This has resulted in the doubling of hospitalization in the last two weeks. Government sources have warned that if SOPs and official guidelines are ignored the COVID-19 cases would the level of June 2020 resulting in massive pressure on the infrastructure in the country.

2. Preventive measures

The government has ordered all educational institutions to be closed from Nov 26 to Jan 10, 2021. The institutions will ensure online education till Dec 24, whereafter winter vacations will start. Markets will shut down at 18h00.

3. Exit strategy

As expected last week, the State Bank of Pakistan has kept the interest rate unchanged at 7% for the next two months to support economic activities which are at a risk losing momentum due to second spike in the COVID-19 cases in the country. The economy has gradually recovered in line with the expectations for growth of slightly above 2% in the current FY and business sentiment has improved further.

The Federal government has granted tax holidays and duty/taxes exemptions on import of industrial machinery and equipment to be located in the Quaid-e-Azam Business Park (Sheikhupura, near Lahore).

The State Bank of Pakistan, under the Rozgar Scheme for protecting businesses and their employees from the impact of COVID-19 has so far approved PKR 238.2 Billion for 2,958 businesses. Under the same scheme the SBP has deferred PKR 659 Billion work of principal repayment of loans up to one year. The bank has also authorized rescheduling of around PKR 207 Billion, this benefitting around 1.57 million small borrowers. On the other hand, the SBP has also approved financing of PKR 7.77 Billion for 39 hospitals to upgrade and enhance their infrastructure.

4. Economy

Foreign exchange reserves by the State Bank of Pakistan rose by 3.74% on a weekly basis. On Nov 20 the foreign currency reserves held by the SBP were recorded at US$ 13.41 Billion, up US$ 484 Million compared with US$ 12.93 Billion in the previous week.

The first ever cargo transshipment from the new Gwadar port to china was executed with 200 tons of fish. This transshipment was handled through 8 reefer containers. The port authorities announced that in the coming days, other transshipment operations would be handled concerning LPG, steel pipes and DAP fertilizers for transit to Afghanistan.

Banking spread (the difference between interest rate that the banks take from borrowers and the rate that the banks pay to depositors) improved for the second consecutive month in Oct 2020 meaning that their profit margins have gone up. This improvement is mainly due to the increased demand for credit after the recovery in economic and industrial activities in the middle of the pandemic.Outstanding loans of banks to the private sector increased slightly to 8.11 trillion in Oct 2020 against PKR 8.09 trillion in Oct 2019. On the other hand, deposits grew at a huge 20% to PKR 16.6 trillion compared to PKR 13.9 trillion in Oct 2019.

The government has announced a restructuring plan for the state -owned steel mill that includes termination of employees and private sector management. The Pakistan Steel Mills (PSM) has been suffering from mismanagement and loss of production since more than a decade and was closed down in 2015 when its operational capacity reduced to 6%. The debt liabilities of the PSM stand at PKR 230 Billion with an annual loss of PKR 15 Billion.

Foreign Trade (October 2020):

Imports

Product		Change %	Against
Tea	PKR 7.7 Bln		Sept 2020
Mobile phones	PKR 10.6 Bln		PKR 30.9 Bln Sept 2020
Dry fruits & nuts	US$ 10.2 Mln		US$ 5.24 Mln Oct 2019
Rubber tires & tubes	PKR 6.2 Bln		Sept 2020
Gold	PKR 213 Mln		PKR 175 Mln Sept 2020
Pulses	US$ 44.9 Mln		US$ 36.3 Mln Oct 2019
Spices	US$ 12.9 Mln		US$ 12.14 Mln Oct 2019

Exports

Product		Change %
Meat & meat prods.	PKR 4.5 Bln	(+) 13.78	Sept 2020
Towels	PKR 12.8 Bln	(+) 7.97	PKR 11.9 Bln Sept 2020
Cutlery	US$ 11 Mln	(+) 42.8	Oct 2019
Bed linen	PKR 40.4 Bln	(+) 7.13%	Sept 2020
Sports goods	PKR 3.32 Bln	(-) 6.3	PKR 3.54 Bln Sept 2020

a. Economic impact

According to a World Bank report employment (% of total workforce) in Pakistan has increased every year from 2014 onwards, reaching the highest level of 4.45% in 2019 and 2020.

b. Trade barriers

No new trade barriers imposed or lifted.

c. Short term opportunities

Flemish companies continue to write to the post in order to prepare the grounds for the opening of the market when the situation in Pakistan normalizes again. Pakistani companies have started contacting this office with new trade leads which are being forwarded to FIT.

According to our outreach program under the slogan “Post-COVID19, Moving Forward Together!” the post has organized Business Contact Days with local Chambers of Commerce and Industry. After successful Belgian Business Contact Days in the Chambers of Commerce in Islamabad, Rawalpindi, Peshawar and Faisalabad, Belgian Business Contact Days were held at the Gujranwala and Sialkot Chambers of Commerce & Industry (GCCI and SCCI) in Gujranwala and Sialkot. The post has planned further outreach events of the same kind in other major Chambers of the country (Lahore and Karachi).

d. Long term opportunities

Apart from the healthcare & medical and building & construction sectors, the long-term opportunities for Flemish countries would depend on the offer and expertise of Flanders region which are already well regarded in Pakistan (steel, metals, chemicals, raw materials, industrial machinery and goods, etc.)

CORONAVIRUS - The situation in Pakistan

 and it's impact on Pakistan by CA Effective learning.

All you need to know about economy of Pakistan. 

5. Political impact on Economy with Covid-19

Apart from the covid situation in pakistan . we are facing the problem of political issues that are going to increase day by day and the economy of pakistan is also going to lower then the normal. We can't say that it is only due to the corona virus that the economy of pakistan is going to destroy. But if some of the political parties remain stop and also not cause for people to trikes then we can say that the economy of pakistan will get stable soon.