EAD analyses impacts of COVID-19 on national economy

ISLAMABAD: The Ministry of Economic Affairs has released a review report regarding the negative impacts of COVID-19 pandemic on Pakistan’s economy, ARY News reported on Thursday.

The Policy Analysis and Development Wing of Pakistan’s Economic Affairs Division (EAD) reviewed the recent reports of the international financial institutions including International Monetary Fund (IMF), World Bank (WB) and Asian Development Bank (ADB) to examine the impacts on the national economy.

The pandemic crisis would increase unemployment besides declining the Gross Domestic Product (GDP) to -1.5 per cent, predicted IMF.

Read: ADB report says Pakistan’s economy will improve by 2021

The World Bank estimated that the real GDP will be -1.3 per cent due to the disastrous outcomes of coronavirus due to a halt in economic activities.

IMF experts said that the inflation rate in Pakistan would reach 11.3 per cent and the fiscal deficit is likely to increase up to 9.2 per cent from 7.2 per cent.

The current situation indicated for a reduction of 2.1 per cent on exports, as well as falling imports up to 16 per cent, stated the report.

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World Bank (WB) predicted that remittances growth is predicted to go down up to 6 per cent in Pakistan, whereas, the total debt of the government to GDP ratio could reach up to 91.8 per cent and the growth rate would become 2 per cent in 2021.

Pakistan would face a shortage of $2 billion for the payment of external debts in the current quarter.

According to EAD, the income per capita in Pakistan stands at $1,497.

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The report stated that Pakistan’s two major financial and economic hubs including Lahore and Karachi were badly affected as around 40 per cent of coronavirus cases reported in the cities.

The restrictions imposed by the federal government in order to curb the spread of the coronavirus have left severe impacts on the national economy.

The Economic Affairs Division said in its report that IMF and WB have projected that the real GDP growth of Pakistan will be in the negative figure for the first time since 1950, whereas, the country is likely to witness a considerable decrease in worker remittances and exports.

Read: Economic experts express fear of rise in current account deficit up to 9.6 pc

The fall in oil prices and weaker import demands will provide some support to the current account balance. However, Pakistan will need new external financing up to $2 billion in the last quarter of 2020, the report read.

The international financial institutions have suggested that the country will witness a slight improvement in macroeconomic indicators in FY2021. The institutions also supported the federal government’s policies to contain COVID-19 pandemic.