The State Bank of Pakistan (SBP) on Monday issued a report highlighting the effects of the coronavirus outbreak on Pakistan’s economy, and warned that in case of an extended lockdown, a number of companies would head towards bankruptcy.
In a series of videos posted on micro-blogging site Twitter, the country’s central bank said that Covid-19 had impacted the global economy, bringing a simultaneous negative impact on the country’s remittances.
The central bank said that purchasing power of the people at local level and foreign investments have witnessed a decline and the virus has affected business activities at the local level as well. It said that decrease in purchasing power would affect the country’s Gross Domestic Product (GDP).
The central bank said that cash flow of factories and business sector was affected due to the lockdown and if it continues for a longer period then it could lead companies towards bankruptcy.
“Bankruptcy of the companies will not only affect the banking sector’s income but also increase the unemployed ratio in the country,” it said while predicting that foreign reserves could also go down in the current situation, leading to a decrease in the value of rupee against dollar.
The SBP said that the current situation will also affect the economic growth rate and budget of the country. It said that the government has taken various measures to improve economic conditions and it had led to decrease in imports and improvement in exports.
However, the report highlighted that the expenditure incurred on health sector in Pakistan amid coronavirus pandemic is far below than other countries in the region.
It said that four out of 10 people in the country are living below the poverty line.
The report further highlighted an increase in country’s debts as on the contrary pressure from oil imports had eased due to low fuel prices at global level.