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).

Pakistan’s economy - The following is the estimated loss incurred by Pakistan’s economy due to Coronavirus (COVID-19) pandemic; •	Prior to COVID-19 outbreak, the 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: $23billion). 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.

  • 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.

Pakistan’s economy - 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