This blog is written by Mr. Asim Habib. Please read this blog and provide your valued comments
Though, the year 2020 will be remembered in history as the year of pandemic and its devastation across the world. However, at the same time, the world will remember this year in redefining the word “normal”. The pandemic triggered complete closure of livelihood to a grinding halt in the name of “Lockdown”. In addition to the dismantling of the social fabric of communities in 2020, most of the financially powerful countries experienced unprecedented recessions which resulted in contraction of economies, job losses, etc.
The global trend of downward curve was clearly visible in Pakistan’s economy in 2020. The GDP growth rate for fiscal year 2019–20 was (–0.4 %). This incidence has not been experienced in the last 7 decades of the country’s history. This impact also exposed the Per Capita income, which plunged to about 20%.
With Macro, Micro and Smart Lockdowns & closures to control the spread of COVID-19 in 2020, Corona Virus also has the blood of economy on its hands.
Without discussing the policies of current and previous regimes, it is a consolidated opinion that the blame of downward moving trend of economy cannot just be tagged with Covid-19. It goes through a process which was continued since FY 2018-19 and the advent of Covid-19 acted only as a catalyst. It is said, because the imbalance of payments and high fiscal deficits were not events of year 2020. Similarly, knocking IMF’s doorfor perhaps 12th time in the last 38 years also happened before COVID-19. As a matter of fact, the IMF program was suspended in March 2020.
For some, this contraction of economy could be taken as a positive change as it helped in maintaining balance of payments and stabilizing the trade deficit. From a pragmatic point of view, it can also be said that the decline of oil prices at the global level also played a role in shaping the rarity of achieving current account surplus. Since, Pakistan’s economy has been overly dependent on imports and exports are often stagnated, therefore, it can be called rarity.
Due to the temporary halt of tough IMF program, some breathing space was found at fiscal level, which enabled the government to make emergency payment to reduce the impact of Covid-19 on the economy. However, this impact was insignificant, considering the size of the population and micro economic conditions in Pakistan. The relief extended by the government was also made possible due to the inflow of IMF’s Rapid Financing scheme and other global assistance.
As the entire world was brought down to a halt, resulting in the suspension of international travelling, the foreign exchange remittances to Pakistan came through banking channels. These remittances were previously sent through certain unauthorized and non-registered mediums. and it was evident from the government’s figures of getting higher remittances than the corresponding period of previous financial year(s).
It was the batsman named “Inflation”, who scored the most in T-20. None of the prices of useable items was spared by inflation. Every effort of the incumbent government to control the inflation has been dealt with more vigor. Rate of inflation kept moving in one direction i.e. skywards. If not controlled or curbed efficiently, it may cause more damage than the pandemic itself.
It is thus concluded that Pakistan’s Economy comes only second in this face off with year Twenty-20.
Let us see how it would fare in the year 2021 and onwards
Syed Asim Habib