Loss incurred by Pakistan’s economy due to Coronavirus

The following is the estimated loss incurred by Pakistan’s economy due to  Coronavirus (COVID-19) pandemic;

• Prior to COVID-19 outbreak, Pakistan’s GDP growth was projected at 3.24% for FY 2020 with Agriculture (2.85%), Industry (1.95%) and Services (4.04%).
• FY2020 posted a negative growth of 0.4% (Provisional), of which Agriculture (2.67%), Industry (-2.64 %) and Services (-0.59%).
• The FBR tax revenue may drop to around Rs 3,905 billion (Pre COVID-19 target: Rs 4800 billion).
• The revenue loss in the range of Rs 700 billion to Rs 900 billion from April to June 2020 is expected.
• With a shortfall in revenues and an increase in public spending due to the fiscal stimulus package, the fiscal deficit is expected to exceed the target of 7.5% of GDP and may go up to 9.4% of GDP.
• Low economic activity in European Union, the United States, United Kingdom, Middle East, and the resultant fall in commodity prices, exports of Pakistan will remain around $21-22 billion (Pre COVID: $5 billion).
• Workers’ remittances are expected to remain around $20-21 billion (Pre-COVID-19: $23 billion).

• Employment Loss

Industrial sector: one million

Services sector: two million.

In total, 3 million jobs are likely to be lost in the initial round of the crisis.

PIDE estimate 18 million: In agriculture, industry, and services.

• Poverty headcount will rise from the existing 24.3% to 33.5%.

The following is the increase registered in the value of the dollar, debt burden and budget deficit due to the COVID-19 pandemic;

• Due to COVID-19, the Pakistani Rupee (PKR) depreciated by 7.5 percent on Month on Month basis in March over February FY2020.
• The volatility observed in domestic financial and foreign exchange markets has somewhat subsided during the month of April and May 2020.

• The increase in debt burden due to COVID-19 will be dependent on an increase in fiscal deficit which is expected to increase by 1.91 percent (from 7.5 of GDP to 9.4% of GDP).
• The budget deficit is expected to exceed the target of 7.5% of the GDP and may go up to 9.4% of GDP due to shortfall in revenues, reprioritizing of expenditures, and increase in public spending due to fiscal stimulus package.

Note: The above data/information was shared with the Senate on June 5, 2020 by the Minister for Finance and Revenue.

Tags: Pakistan’s economy, COVID-19, Coronavirus