Dawn

Coronavirus and The Economy

Editorial Updated March 10, 2020

RECENT ADB estimates suggest that Pakistan’s economy could Asian Development
Bank
suffer a loss of up to 1.5pc in its GDP growth rate due to the fallout
from the spread of the novel coronavirus, while the capital new or unusual in an
interesting way.
markets have already been roiled by a strong bout of volatility due
make (a liquid) turbid
to mounting fears and anxiety. or muddy by disturbing the sediment.
a short period of
World oil markets are seeing a sharp fall — according to intense activity of a specified kind
some reports the sharpest drop in oil prices since 1991. liability to change
This has driven down oil-related stocks that carry heavy rapidly and unpredictably, especially for
the worse.
weightage in the KSE 100, such as OGDC and PPL, both
of which hit their lower circuit breakers on Monday. The Karachi Stock
Exchange 100 Index acting as a benchmark
In addition, some estimates suggest the global aviation to compare prices on the Pakistan Stock
industry could see up to $113bn worth of revenue losses as Exchange over a period
a result.

Global supply chains have been disrupted badly because

of the massive shutdowns in China that have either closed
down industries altogether, or disrupted the return of
workers from the new year holidays to the point of creating
acute labour shortages in industrial areas that are not
directly impacted by the shutdowns.

In every sphere, from travel and aviation to shipping and

transport as well as oil prices and capital markets,
economies around the world are seeing sharp downswings
as a result of the fallout from the efforts to contain the
spread of the coronavirus.

There are reasons to be concerned here in Pakistan as well.

At the moment, there are no indications emerging of a

widespread outbreak of the virus. But each day the number
of people diagnosed positive is rising, albeit slowly, and conjunction
although.
there is no way of knowing how far this is going to go.
Besides the obvious public health emergency this poses,
the fallout for the economy needs to be taken stock of. To take stock (of
something) is to think carefully about a
Some people think it is a positive sign that Pakistani
situation or event and form an opinion
exporters are picking up the orders that might ordinarily
have gone to China and exports could see a spike in the
months ahead. But it would be terribly short-sighted to find
much comfort in this fact.

If the shutdowns persist and spread, it will also seriously continue firmly or
obstinately in an opinion or a course of
impact the scale of demand for Pakistan’s traditional
action in spite of difficulty, opposition, or
exports, such as garments. failure.

Beyond that, the sharp fall in the value of oil-related stocks

means the divestment of OGDC shares that was planned in the action or process
of selling off subsidiary business interests
the next few months will have to be postponed, and the
or investments.
privatisation programme will need to be shelved since
decide not to proceed
global buyers are in no mood to extend their stakes while with (a project or plan), either temporarily
the uncertainty persists. or permanently.

It is not known how far the phenomenon will go and how

many shutdowns we will have to see around the world and
for how long.
In this environment, an economy such as Pakistan’s, which
is struggling to emerge from the crippling effects of a causing a severe and
almost insuperable problem
macroeconomic stabilisation programme, will face far more
challenges than opportunities.
Published in Dawn, March 10th, 2020