- Inaction despite several heads-ups
The PTI government’s attention has so far been concentrated on preventive measures to contain the coronavirus (COVID-19). Equally important however is the likely impact of the epidemic on the national economy. According to the OECD’s latest Interim Economic Outlook, COVID-19 presents the global economy with its greatest danger since the financial crisis of 2008. The US Federal Reserve has cut short-term rates by half a percentage point, the biggest cut in more than a decade, in view of the evolving risks from the infectious disease. factory activity has fallen to its lowest on record, bringing down world business activity. Pakistan cannot remain unaffected by the negative development in Chinese economy.
The British government estimates that up to a fifth of the country’s workforce may be off sick during the peak of a possible coronavirus epidemic in the country. The USA, China and United Kingdom, the three largest importers of Pakistani goods, are planning for the worst. But are we?
The regional picture should especially worry Pakistan’s economic managers. The virus is now penetrating into the countries of the Middle East where millions of Pakistani workers are employed and the PTI government hopes to send more there, particularly to Qatar. After 230 cases of the virus already confirmed in the Middle East, businesses are coming under pressure. In the UAE, where 27 cases of coronavirus have been reported, business activity is on the way to decline. Shares in the leading global property developer, Emaar Properties PJSC, fell 10 percent this week, while Emirates Airline has reduced its flights and asked staff to take unpaid leave for a month. In case of the virus continuing to spread while there are no signs of a vaccine before the end of the year, and the downturn in the Middle East economy might lead to the layoffs of tens of thousands of Pakistani workers. There is a need therefore for policy makers to concentrate on making emergency plans to face the headwinds in case the coronavirus turns into a pandemic in the region. There has been a sudden withdrawal of $263 million out of $3.47 billion investment in Pakistan’s government securities. A financial expert ascribes this to panic created by coronavirus. This should be yet another eye-opener.