Pakistan's economy

and impact of Covid-19

Introduction
• In Pakistan, the first confirmed cases of
COVID-19 appeared only in the last week of
February.
• Additionally, it felt that China’s misfortune,
i.e. a fall in production, could be an
opportunity for Pakistan to increase its
exports, particularly textiles.
• But in the end of February, the possibility
emerged of the pandemic leading to
negative growth in Pakistan.

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Continued
• On the day the first infected cases were
discovered, the Health Minister Dr. Zafar Mirza
said, “With Allah’s blessings, this [virus] will not
take the form of an outbreak in Pakistan.”
• However, it has now become clear that COVID-
19 is dreadful for Pakistan’s already weak
economy.
• The main concern for the Government of
Pakistan has been the economic impact the
lockdown will have on the poor segments of
the society, and fragile economy on the whole.

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Growth
I n t h e fi r s t w e e k o f M a r c h , t h e A s i a n D e v e l o p m e n t B a n k ( A D B ) c a m e u p
w i t h a p r e d i c ti o n s b e i n g m a d e a r o u n d t h e w o r l d .

• According to the ADB, Pakistan’s economy
would
• Lose around US$ 16 million in the best-case
scenario and around US$ 61 million in the
worst-case scenario.
• The loss would amount to approximately
US$ 5 billion, the GDP would contract by
1.57 percent, and
• nearly a million people would lose their jobs.
• By the third week of March, the ADB had
drastically revised its estimates
• to a US$ 415 million loss in the best-case
scenario, and a US $6.6–17 billion
• the GDP growth contracting by two to
five percent.
• and loss of employment ranging from
1.2 million to 3.2 million jobs

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Impact of Covid-19
The implications for the financial system from COVID-19 divided into two broad areas.
1. International and external impact
2. On the internal side

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State Bank of Pakistan
• The SBP has figured number of measures in response to the pandemic, of which the
most significant one was to reduce the benchmark policy rate from 13.25 percent to
eight percent. 
• The outbreak of COVID-19 on 16 March 2020 forced the SBP to cut the interest rate
by 75 basis points. The rate was reduced by another 150 basis points a week later,
and by 200 basis points more three weeks after that.
• Businesses have demanded the rate to be further reduced by four to five percent.
While this move will provide temporary relief,
• it is unclear whether it will encourage economic activity even with the pandemic.

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Government of Pakistan efforts
• Around 10 million families are being given subsistence, for those who have been
directly hit by the virus and the lockdowns.
• The Prime Minister has announced a tiger force as a volunteer body for supplying
food and basic necessities to poor families.
• A national relief fund for donations has been created.
• China has been engaged to assist in financial as well technical matters.
• Army has been called to take part in the fight against Corona

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Thankyou 