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Effects of Pandemic on different industries of Pakistan 1

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Author: Baber Ali
alibaber377@gmail.com
Lahore, Pakistan

5/30/2020

Effects of Pandemic on different industries of

Pakistan
Contents

INTRODUCTION. ....................................................................................................................................... 2
EFFECTS OF PANDEMIC ON DIFFERENT INDUSTRIES OF PAKISTAN. ......................................... 2
Effects on the Pakistan’s Economy. .......................................................................................................... 2
Asian Development Bank report: .......................................................................................................... 2
International Monetary Fund (IMF) Report: ......................................................................................... 3
World Bank Report: .............................................................................................................................. 3
Ministry of Planning report: ................................................................................................................ 4
Agricultural exports of Pakistan. .......................................................................................................... 5
Effect on Food Industry of Pakistan ......................................................................................................... 6
Fruits and Vegetables are more vulnerable. .............................................................................................. 7
Effects on Small and Large Scale Business Owners. .................................................................................... 7
Effect/ chances of Entrepreneurships. ....................................................................................................... 9
Technology push. .................................................................................................................................. 9
SOLUTION TO HANDLE CURRENT SITUATION ................................................................................. 9
Bibliography ................................................................................................................................................ 10

1
INTRODUCTION

Corona virus emerged in Wuhan city, Hubei province, China on December 31, 2020. World
Health Organization declared Europe new center for corona virus after China and Iran. WHO
declared the corona virus as pandemic on March 11, 2020. The fatality ratio of corona virus is
much slower than then the SARS of 2003 but transmission rate is much greater. Virus was
affirmed to have reached in Pakistan on February 26, 2020 when a student in Karachi tested
positive after come back from Iran. First, whole country was put in partial lockdown except
Sindh, where government of Sindh decided to implement full lockdown. Then, government of
Pakistan decided to implement smart lockdown. In this case, where corona case will be traced,
only that particular area will be locked. Government has adopted the track and trace system used
by Inter-services intelligence (ISI).As whole country is put in lockdown because of pandemic, it
will have huge impact on country’s economy. All the industries are shut down and many people
have lost their job because of pandemic. Major sectors which are going to be affected due to
corona virus are economy, agricultural, textile, food, small and large businesses. Pakistan has
started to work on preparation of vaccine with the help of Chinese pharmaceutical firms.

EFFECTS OF PANDEMIC ON DIFFERENT INDUSTRIES OF PAKISTAN

Effects on the Pakistan’s Economy

Pakistan is developing state which has been facing great crisis after crisis and has tasted political
instability, corruption and poor governance problem. Economy of Pakistan has always been on
ventilator, corona virus can destroy our economy as it destroys the immune system of humans.

Asian Development Bank report:

Pakistan's financial development is projected to slow down to 2.6% this year because of
continuous adjustment endeavors, more slow development in horticulture and the effect of the
corona virus according to latest ADB yearly report. Asian development Bank also projected that
economy of Pakistan may face $16 to $61 million losses due to pandemic outbreak. Pakistan's
economy continuing an astounding $5 billion misfortune because of spread of the infection

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called COVID-19. For this situation, Pakistan's GDP will lose 1.57% and 946,000 individuals
will be jobless.

Pakistan GDP Growth forecast

6.00%

5.00%

4.00%
% Growth

3.00%

2.00%

1.00%

0.00%
2018 2019 2020 forecast 2021 forecast
Year

Source: ADB report, Asian Development Outlook ADO 2020 (April 2020)

International Monetary Fund (IMF) Report:

The IMF projected GDP growth of Pakistan to be 1.4% this fiscal year. The impact of
coronavirus on Pakistan’s economy depends upon time of handling of pandemic and how it
spreads in surroundings. IMF mission also has expressed worries over pandemic effect on
Pakistan's economy as slowing down of China’s economy may also badly influence Pakistan's
GDP improvement attempts for the current monetary year. In any case, Pakistan’s experts says
there will be no negative impact on GDP growth of country which will remain 3.3 percent this
year and inflation rate will remain constant near 11 to 12 percent.. Unemployment rate of
Pakistan may rise up from 4.1 percent to 4.5 percent according to report. Pakistan will get $1.4
billion from IMF because of pandemic to increase its foreign exchange reserves and budget due
to economic slowdown.

World Bank Report:

World Bank has projected that economy of Pakistan may face recession due to pandemic. With
1.8% population growth, per capita income will decrease pushing more people below poverty
line. World Bank said that Pakistan, Afghanistan and Maldives may fall into recession. South
Asia comprising of 8 countries with 1.8 bn people is expected to slowdown in economic growth

3
to 1.8% to 2.8% which was projected 6.30% six months ago. Pakistan may face downfall
progression of 1.5% in current fiscal year and around 20 million people may lose their job due to
lockdown and corona virus pandemic which has shaken the economy and business of whole
world.

South Asia’s GDP growth forecast by World Bank

Ministry of Planning report:

The planning Ministry of Pakistan has assessed that the total size of Pakistan’s Gross Domestic
Product will remain at 44 trillion rupees & ¼ of it will remain 11 trillion rupees, so the
interruption brought about by pandemic can cause loss of 10% GDP in last quarter that would
remain at 1.10 trillion rupees at any rate. The Planning Ministry of Pakistan has assessed that
12.30 million to 18.50 million individuals in the country are expected to lose their jobs and the
national GDP will continue 2 trillion to 2.50 trillion rupees losses in only 3 months because of
"moderate to serious stuns from the lockdown due to pandemic. This projection is for partial,
moderate and full lockdown. The ministry has surveyed loss of 2.0 trillion rupees in case of
partial lockdown, 1.960 trillion rupees in case of moderate & 2.50 trillion rupees in the case of
complete lockdown. However, government of Pakistan has decided to ease the lockdown all
across the country as Eid is near and to save daily wagers from hunger that was more
dangerous than economy loss of 2 trillion rupees.

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Effect on Agricultural sector

Agriculture sector contributes almost 20% in the national Gross Domestic Product (GDP) of
Pakistan and 40% of total labor is linked with this sector. And many exports like rice, wheat,
sugar and cotton are related to agriculture. Since Pakistan exports this agriculture related
products and these exports contribute almost 20% in national GDP of Pakistan. As all countries
have totally banned their imports and exports due to pandemic and whole world is in lockdown,
it has become much difficult for our farmers to export their products like wheat, mangoes and all
summer fruits and vegetables. Wheat is harvesting in whole country and it has become very
difficult for our farmers to hire labors because of government imposed social distancing SOPs.

Agricultural exports of Pakistan.

Note: Quantity in tons, amount in Million rupees

Commodity 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Quantity 169.403 20.037 10.441 1.145 3.676 1189.604

Wheat Amount 5126.000 732.000 311.000 35.00 101.000 27109.00

Quantity 3407.688 3743.427 3786.111 4262.216 3518.819 4106.010

Rice all Amount 186623.000 222885.000 206254.000 194227.000 168247.000 224907.000

Quantity 1064.000 647.333 708.968 293.541 307.862 1469.802

Sugar Amount 51692.000 29638.000 32686.000 13818.000 16890.000 56379.000

Quantity 2 92.500 114.790 95.017 49.550 24.976 35.347

Raw cotton Amount 14882.000 21353.000 14937.000 7948.000 4484.000 6183.000

Fruits all Quantity 37772.000 45196.000 44375.000 44607.000 39963.000 43927.000

Amount 37772.00 45196.0 44375.00 44607.00 39963.00 43927.00

Vegetables Quantity 724.258 568.079 750.972 701.050 623.626 875.269

Amount 23015.000 21508.000 23490.000 22233.000 19539.000 26841.000

5
After harvesting wheat, it will be procured by flour mills and local flour millers which will start
processing. But since whole country is lockdown and it requires harvesting, transportation,
processing and storage to meet the consumer demand, it has become much difficult for the
farmers to harvest and transport wheat from one part of country to other because of lockdown.
But as government is easing lockdown as Eid is arising near, now farmers can transport their
wheat to market. So it will be exaggerated if one says that it will have impact on farmers
economically. It will have no effect on farmers as corona virus cases are very low in villages and
villages are open and there is no problem of hiring labor for harvesting and transporting wheat.

But Lockdown will have huge impact on the country’s economy as exports are mostly agri based
and contribute almost 20% in GDP of Pakistan. All countries have banned their imports amid
corona virus, so it is going to affect Pakistan’s exports of wheat. Pakistan is one of the largest
exporters of wheat which means it will also have impact on global food security. Almost 60% of
our economy is agro-based, means it can have huge impact on country’s already struggling GDP
as predicted by IMF, World Bank, ADB and Planning Ministry of Pakistan.

Pakistan’s export commodities are food and clothing, which are mainly associated with
agriculture, and as demand from foreign import partners is slowing, it will inevitably hurt our
exports. Therefore, all figures suggest that the supply chain, along with the agricultural sector
and associated input providers, may be adversely affected by the prevailing epidemic. Based on
historical trends, the average urea industry is currently recording a significant reduction of 5.8M
tones over the past 5 years and is projected to decline to 5.4M tones’ for the current year. Wheat
and mangoes production is also ready, so it is expected that if exports remained banned for long
it will impact Pakistan’ GDP and farmers financially

Effect on Food Industry of Pakistan

Some experts in Pakistan believe that pandemic will not affect Pakistan’s food industry at all
especially during current fiscal year and they believe that we have enough storage of wheat and
other cereals for local needs. Moreover, it will not affect food security even next year as Pakistan
is self-sufficient in wheat and rice production. Pakistan has surplus of wheat and other food items
for its local market. However, it is expected that pandemic will have effect on those who provide

6
food in our basket and will disrupt the whole supply chain of food like farmers, vendors,
transporters, processors and end consumers with inflation in prices. Farmers may face lack of
labors which will delay the whole process of harvesting wheat and other can delay the other food
products like mangoes picking and vegetables which will impact daily wagers, farmers and end
consumers. Pakistan may face spike in prices of some vegetables which are imported from
neighboring countries like India and Iran as all countries have banned their imports and exports.

Fruits and Vegetables are more vulnerable.

Some fruits and vegetables are more vulnerable in Pakistan’s food industry because certain items
cannot be stored. Mango production is ready since the 1st week of May in Sindh and Punjab. As
all countries are under lockdown so it will create much difficulty for farmers to transport their
mangoes to local market as well as in international market. Because of lockdown, almost every
house is affected in terms of finance. So people will not buy as many mangos as they used to be
because of low money and increase in unemployment which will increase supply demand gap
resulting in prices of mangoes may fall in local market as well as in international market.
Pakistan almost produces 1.70 million tons of mangoes which are exported to more than 50
countries mainly to Gulf countries like UAE and Saudi Arabia. So if not exported to other
countries it will also affect farmers and economy of state.

Similarly, wheat will not be exported to other countries due to pandemic and farmers will try to
store unless exports are opened, resulting in shortage of wheat in local market which will
increase the prices and will increase the risk of food insecurity.

Effects on Small and Large Scale Business Owners

Pandemic has produced negative impact on the businesses all across the world and Pakistan is no
exception. According to an estimate, lockdown will affect 5.20 million enterprises in whole
country. Small and medium enterprises development authority (SAMEDA) has done survey to
assess the situation in country due to covi-19. The report reveals the problems faced by SMEs
due to pandemic and its impact on unemployment and production. According to 95% responders

7
of enterprises have experienced reduction in operations and 100% loss of export orders.
Likewise, 92% of respondents have revealed a disturbance in their supply chain. Increasing
unemployment is one of the significant issues during lockdown & 46% of businesses have
removed their employees due to pandemic.

8
Effect/ chances of Entrepreneurships
Pandemic has provided opportunity for business owners or entrepreneurs to be more innovative
and advance. Some entrepreneurs may switch from automotive suppliers to biomedical
instruments like ventilators etc. Some may shut their old instruments because of poor quality like
testing kits from China are of poor quality. Reputations are built and sometimes lost during time
of crisis. Consumer will remember the industries which are donating during shortages and some
are trying to create artificial shortage of wheat and sugar by storing. Some industries which are
removing labors during crisis situation may face lack of labors in future due to trust issue.

Technology push

Technology has many opportunities in this crisis situation to be transformed by entrepreneurs.

China is fine example of innovative use of technology by entrepreneurs. For instance, online
shopping and online entertainment like Alibaba and Wechat saw major growth during lockdown.
Similarly, Mark Zukerberg who invented Facebook has earned almost $ 30 billion during three
months. Health care sector also observed smartphone apps in China.

SOLUTION TO HANDLE CURRENT SITUATION

Online businesses should be encouraged. People should be forced to buy from online traders and
traders should not compromise quality. Government should provide tax relief to all kinds of
small and businesses. Small farmers should be provided incentives in the form of cash or
Government should buy wheat from farmers so that their loss can be compensated. People
should not be allowed to store the wheat production in this pandemic situation. Government
should keep the food chain running by ensuring labor, transportation all across country. ‘Made in
Pakistan’ should be encouraged during pandemic to keep economy on track. Foreigner products
should be discouraged by applying more taxes so that local business owners can create job
opportunities.

9
 Bibliography
(Khan M. I., Asian development bank, Asian Development outlook, april 2020)

(Rana, Coronavirus may cause $61m loss to Pakistan: ADB, march 7,2020)

(Malik S. A., Pak economy under dark shadow of coronavirus vs deep chronic economic crisis, march
26,2020)

(Haider, Coronavirus: Pakistan may face initial economic loss of Rs1.3tr, March 20,2020)

(Haider, Pakistan economy to loose 2.5 trillion due to coronavirus: report, April 03,2020)

(News, Coronavirus: Pakistan may fall into recession, says World Bank report, april 12,2020)

pakistan, IMF: Stung by virus, Pakistan’s growth rate to hit negative 1.5 percent, april 13,2020

(Rana, Coronavirus forecast to render 18.5m jobless in Pakistan, April 17,2020)

(Suleri, Corona and the rural economy, April 04.2020)

(Imran, Online conference on impact of coronavirus on agri sector, April 22,2020)

(Khan N. A., COVID- 19 Pandemic to dent Pakistan’s agri industry, March 29,2020)

(Jamal, How will COVID-19 affect Pakistan farmers, food system?, May 01,2020)

(Klaus Meyer, The coronavirus crisis: A catalyst for entrepreneurship, April 12,2020)

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