COVID 19 Effects on global and Pakistan's economy

(Dr.Syed Mehboob, Karachi)

Corona Virus or COVID 19 is a global threat and menace which affected human lives, social activities , business and economy. The golbal stock market plunged and wiped out trillions of dollars invesmnet globally. The FTSE,DOW Jones, Industrial Average and The Nikkie have all seen a huge fall since the out break began on 31st December, 2020. Nikkie fell 28.7 % , Dow Jones 31.11 percent and FTSE 100 witnessed a fall of 34%. The Dow and FTSE have seen their biggest one day decline since 1987. Investors fear the spread of Coronavirus will destroy economic growth and they they think their governments action might not be enough to stop the decline. The situation as on 23rd March,2020 is that there are 267,013 confirmed cases world wide , 11,201 deaths, and 185 countries have been affected. In Pakistan there are 779 confirmed cases, so far there are only three deaths. Sindh is the most affected province with 396 cases with one death, Balochistan 103, Punjab 137, KPK 27, with two deaths, Islamabad 10, AJK 1 and Gilgit Baltistan 12.

Central banks in more than fifty countries have cut their interest rates , in US interst rate is zero, UK 0.25 percent, South Korea 0.8 percent , Australian 0.5 percent but unfortunately Pakistan cut only 0.75 percent and now interest rate is 12.50 perecent which was 13. 75 perecent five days before. The travel industry in the world had badly damaged, with airlines cutting flights and tourists cancelling business trips and holidays more than hundred countries have travel restricutions because of Coronavirus. The EU has banned travellers from outside of the block for thirty days in an unoprecedented move to seal its borders because of the coronavirus crisis. The analytic firm Forward Keys has estimated that up to 82,200 flights with 10.2 million seats could be affected by the ban, with the biggested impact on Air France. In the United States of America , the Trump government has banned travellers from European airports from entering the US. Restaurants' bookings in several countries have almost completely collapsed. Hotel bookings fell in UK 82 % , US 84 % , Ireland 86%, Germany 90%, Canada 94%. There is a blessing in disguise although corona virus has badly affected China however with its government and peoples' detemination and committment China has effectively controlled the spread of virus and since last three days no new cases are reported. NASA said pollution monitoring satellites had deceted a significant drop in nitrogendi oxide over the country.Evidence suggest that at least partly due to economic slowdown caused by the outbreak.

Corona Virus badly affected industries output in China which fell by 13.5 % in the first two months of the year. Chinese car sells dropped by 92 percent. Gold id considered a safe heaven in times of uncertanty but untill the begining of the March 2020, the prices of gold increased but now, with incestors increasingly feared about a global recession its prices fell down. It started from $ 1500 to peaked at $1700 in the begining of the Marach 2020 but fell to $ 1,476 in the mid Marach 2020. Oil prices plunged to $ 26 per barrel in March the lowest since thirty years. China's growth rate was 6 % in 2019 which is likely to remain below 5 % in 2020, worlds growth is expected to fell from 3 % to 2.3%, US from 2.4 % to 2 % , UK from 2 % to 1 % . Italy which is badly affected with Coronavirus it economy's growth is at zero percent.

It is estimated that the economic fall out could include recession in the US,Euro area and Japan, the slowest growth on record in China and a total of 2,700 billion or $ 2.7 trillion loss out which is equivalent to the entire GDP of UK.

Corona threat also affected Pakistani economy badly and its stock market crashed five times since the outbreak of this virus. Its stock market fell 25 % and now is at 28,000 index which is the worst since 2008. Also foreign investors took out $ 1. 3 billion from treasury bills of $ 3 billion which badly affected Pakistan's foreign reserves. In coming months Pakistn's export market would also be affected. Sindh government has announced 15 days lock out while in Punjab and KPK there is partial lock out. This will affect Pakistan's GDP growth which might fell to 2 from expected 2.5 %. Besides there might be unemployment of millions of people due to business and industry clouser. Due to Coronavirus threat in Saudi Arabia, UAE, Oman, Qatar and EU countries Pakistan's remittances would also be affected negatively. However Pakistan's import bill might fall significantly because due to fall in oil prices its import bill will reduce significantly besides edible oil prices also decreased about 35 to 40% .These factors might reduce the import bill upto $ 8 billion and our trade deficit could further be reduced. The government should provide relief to low income segments of societies and reduce the petrol proces up to 25 rupees and reduces the interest rate from 12. 5 percent to 7 percent to provide chances of growth to economy. Government should get help from social network of Alamgir Welfare, Akhuwat, Baitus Salam Trust, Selani welfare and Alkhidmat to provide ration and other necessities including medical aid to poor segments of society. Above all there is a need of mplete unity, both governemnt and opposition, ulemas, intellectuals, media, religious seminaries , business communities join hands to stand as one nation against this menace. We should also turn towards Allah Almighty and seek His guidance, help, and turn towards Him to ask His forgiveness, mercy and blessings.

Dr.Syed Mehboob
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