COVID-19 has hit the world’s economy in an immense negative way. It was started as a small viral outbreak in Wuhan city of China has now engulfed the whole planet. The biggest economies of the world which include the USA, Germany, UK are on the verge of destruction. Developing countries like Pakistan which are already facing hard times in economic terms are in great trouble. Due to the lockdown condition, businesses are running less than 50% of their full capacity. The agriculture sector is suffering a lot which is the major contributor to GDP. The unemployment rate has already increased and the people working on daily wages are in miserable condition. According to the Ministry of Planning, it is expected that 12.3 million to 18.5 million people in the country will lose their jobs in just three months due to moderate to severe coronavirus shocks.
According to the initial estimates, if the lockdown is not severe, about 1.4 million jobs will be lost which makes 2.2% of the working employees. In terms of finance, it is equal to 66 billion rupees.
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In the scenario of a moderate lockdown in which offices and shops are closed but the essential stores are open, it is predicted by the government that 12.3 million people will become jobless. And this is around 20% of the employed labor force. In financial terms, the loss of wages will be Rs561 billion for three months only.
Ministry reports that in such a case, 2/3rd of the employed force is daily wagers, 30% is working on the piece rate and the remaining are street vendors.
BUSINESS AND REVENUE LOSSES
If we see the government’s revenue side, it is estimated that the Federal Board of Revenue could experience a reduction in revenue and cash outflows of about 600 billion rupees in the final quarter of the financial year.
As per government predictions, 9.3 billion rupees will be lost by the aviation sector and the stock market will sustain the loss of 250 billion rupees initially. Ministry of Maritime Affairs and the Ministry of Energy will endure the loss of 30 million rupees and 136 billion rupees respectively. For the agriculture sector and Railway ministry loss is 55 billion and 8 billion rupees individually.
The exponential decrease in trade activities is also expected. One report of writers pk shows that if the imports are declined by 2% and nil in exports then the fourth quarter GDB would be cut off by 0.3% and it makes 45 billion rupees. In case if both imports and exports are reduced by 10% each, then the final quarter GDP would be shaved by 2.3% and it is equal to 345 billion rupees. Likewise, a 20% reduction in exports and imports in the fourth quarter will decrease the GDP by 4.7% or 700 billion rupees.
LOSSES FOR THE TEXTILE INDUSTRY
Almost 60 percent of the exports of Pakistan are textiles. This sector is currently suffering from the issue of raw material shortage such as chemicals and dyes as most of the raw material is imported from China. The business contributes intensely to the foreign currency reserves of this dollar-tied nation that finds itself quite frequently with just enough reserves to pay for one and a half to two months of imports.
The final quarter of the current fiscal year and the starting two-quarters of the next financial year i.e. FY21 will carry extraordinary levels of finance shortage problems as investors have started their investments in the form of gold and dollars.
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THE FINANCIAL DEFICIT FOR PAKISTAN INTERNATIONAL AIRLINE
Pakistan international airline (PIA) is taken as one of the major deficit powerhouses in Pakistan. The national flag carrier is already running in a net operating loss for the many years and this pandemic condition has worst its condition more. If this situation continues for the next two to three months, it will start terminating its employees.
The airline will keep running a loss of approx. 63 million dollars per month if its flights remain suspended for the upcoming 25-35 days. This loss of demand is affecting the worldwide aviation sector and bringing the private airlines on the edge of economic failure.
The whole world is facing great economic issues during this coronavirus pandemic. Developing countries like Pakistan are struggling hard a lot to overcome this condition. Shortage of raw material, partial to complete lockdown, revenue losses have ultimately increased the unemployment rate. Many people are working from home but the situation is not the same everywhere. The life of daily wagers and street vendors have become terrible. Let us hope and pray that may Allah Almighty keep us safe and may this pandemic life get back to normal life.