Skip to main content

Economy will need ‘reset and reboot’ after recession

ISLAMABAD: Pakistan is facing the worst economic conditions in its history — a negative economic growth at 1.57 per cent and a fiscal deficit of 9.6pc — during the current fiscal year owing to economic losses in the aftermath of coronavirus pandemic.

“In a worst-case scenario, the growth rate could remain negative at 1.57pc of GDP”, said the Ministry of Finance on Tuesday after Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh met with representatives of multilateral lending agencies. The poverty situation was also likely to worsen in the country, the statement noted.

Also read: Pakistan will be among hardest-hit economies by coronavirus crisis, says UN report

This is the first time that the government has officially affirmed that the country would be in recession even though many leading lending agencies like the International Monetary Fund and the World Bank had estimated negative 1.3-1.5pc GDP growth for the current fiscal year.

Pakistan’s economy grew by 3.3pc last fiscal year and was estimated to maintain that pace before the pandemic.

DFID, World Bank and UN warn against relaxation of lockdown

The meeting presided over by Dr Shaikh and attended by leading development partners, including World Bank, Asian Development Bank (ADB), Department for International Development and United Nations Development Programme underlined several challenges the country was likely to face on the economic front due to the impact of pandemic on the national, regional and global economy. The meeting warned against any relaxation in the lockdown.

The finance ministry said the participants agreed that while it was too early to predict the impact of Covid-19 but if the crisis persisted then the manufacturing and service sectors as well as the exports were likely to be severely affected by 2020. On the positive side, Pakistan’s agriculture growth was likely to remain intact.

The participants said the fiscal deficit could rise to 9.6pc of the GDP while the impact on poverty could also be higher due to closure of businesses and restricted economic activity.

It was also pointed out that the Covid-19 crisis had drastically affected the global economy that could shrink by 3pc. Similarly, it was also felt that there would be negative growth throughout 2020 and the chances of recovery were expected from the start of 2021.

The meeting underlined the need for pursuance of a clear, transparent and unified plan of action combining a “whole of the country” approach backed by necessary constitutional measures to sail out of the crisis. The meeting emphasised expenditure rationalisation, particularly reduction of low-impact spending, and revenue generation as key areas of focus in coming months.

“It was felt that the construction sector could provide the key for resurgence of economic activity”, the ministry said in a statement.

The meeting also warned against the relaxation of lockdown which could further increase the infection rate and put an unbearable burden on the healthcare system which was already finding it hard to provide regular healthcare services due to increased focus on dealing with the Covid-19.

It was suggested that the country would be required to “reset and reboot” its economy to get above the red line. It was felt that the second tranche of cash grants to those vulnerable segments who were adversely affected by lockdown and closure of businesses would be required to further the relief efforts.

The ADB informed the meeting that they are interested in giving local currency loans to small and medium enterprises adversely affected by this crisis.

The meeting also noted that the speed, efficiency, and transparency with which Pakistan has already disbursed more than Rs75 billion to its millions of vulnerable population was unprecedented in the entire region and such a thing was unimaginable in the recent past of the country, the statement said.

Published in Dawn, April 29th, 2020



from The Dawn News - Home https://ift.tt/2y8Q7ey
via IFTTT

Comments

Popular posts from this blog

Trump says he urged team to ‘slow’ COVID-19 testing

US President Donald Trump said Saturday he was encouraging health officials in his administration to slow down coronavirus testing, arguing that increased tests lead to more cases being discovered. The president has claimed falsely on several occasions that surges of COVID-19 in several states can be explained by greater numbers of diagnostic tests. At his first rally since the outbreak forced nationwide shutdowns in March, Trump told the crowd in Tulsa, Oklahoma that testing was a “double-edged sword.” The United States — which has more deaths and cases than any other country — has carried out more than 25 million coronavirus tests, placing it outside the top 20 countries in the world, per capita. “Here is the bad part: When you do testing to that extent, you are going to find more people, you will find more cases,” Trump argued. “So I said to my people ‘slow the testing down.’ They test and they test.” It was not clear from Trump’s tone if he was playing to the crowd, who ...

Sir Anwer Pervez, richest Pakistani British businessman, loses £432m in pandemic

Sir Anwar Pervez OBE, the founder and chairman of Bestway Cash & Carry has lost £432 million during the coronavirus pandemic to bring him down to No 50 on the richest British people list. The list has 1,000 people and is published by the Sunday Times newspaper . Pervez was at No 42 previously.  The 2020 list of the UK’s richest shows its first fall in wealth in a decade as Britain’s wealthiest people lost tens of billions of pounds in the coronavirus pandemic, the Sunday Times reported in its Rich List 2020. The newspaper, which has produced the respected annual ranking of the country’s 1,000 wealthiest people since 1989, found the past two months had resulted in the super-rich losing £54 billion ($65 billion). More than half of the billionaires in Britain had seen drops in their worth by as much as £6b, a decrease in their collective wealth unprecedented since 2009 and the financial crisis. The Hinduja brothers, who topped last year’s list with a £22b fortune, saw among ...

Despite reservations about jury, Pakistan to implement FATF reforms: envoy

WASHINGTON: Despite its reservations about the fairness of the jury which is to determine Pakistan’s performance against terror financing, the government is committed to implementing its action plan for dealing with this issue, says Islamabad’s Washington envoy Asad Majeed Khan. In a conversation with a prominent US scholar George Perkovich, recorded at the Carnegie Endowment for International Peace in Washington on Monday afternoon, Ambassador Khan said the actions that Pakistan had taken so far to eliminate terror financing were “reflective of the political will”. “We feel that we have done a lot. We are also clear and determined to do more,” said the envoy while responding to a question about a meeting of the Financial Action Task Force (FATF) held in Orlando last week, which asked Pakistan to implement its own action plan for eliminating terror financing by October. Failing to do so could put Pakistan on a blacklist of violators and bring strict economic sanctions too. “But we w...