Post-Pandemic Economic Outlook Of Pakistan 2022

The COVID-19 pandemic has affected the health status of Pakistani people from the first wave, it continuously not only impacts the economy of Pakistan but affects social quality also. In a country, where geopolitical issues are increasing daily, COVID-19 impacted the economy of Pakistan by 25 million Pakistani lost their jobs, Pakistani Rupee devalued 14.3 percent against the US $, so definitely the GDP growth of the state will be disturbed.

Entries of the new variants of COVID-19 in Pakistan made the situations more vulnerable. 

This editorial will lead you to the after-effects of the COVID-19 pandemic on the economy of Pakistan, GDP estimation, stock exchange conditions, economic update and position of Pakistan, and Government policies against COVID-19's economic effects.

As Asian Development Bank (ABD) stated that

"This pandemic of COVID-19 can cost the economy of Pakistan about $16.38 million to $4.95 billion, almost 1.57% of the overall GDP. This report also estimates the job losses in Pakistan that is more than 946,000 of pandemic cost."

As per the National Library of Pakistan

"Further than the momentary inconveniences of managing COVID-19, this disease attends to an extreme and great trial facing Pakistan's economy.

The expulsion of the COVID-19 outbreak has pushed the public and global economy. Pakistan is incorporated, making  huge number of individuals stay at home, suspend or end business tasks, and lose their positions. Joblessness in Pakistan has accomplished almost 25 million individuals, driving numerous towards states of craving and destitution as the major financial harm in various areas is predicted at around PKR 1.3 trillion. The hardest-impacted areas incorporate enterprises like travel and the travel industry, diversion, fabricating and monetary business sectors, and so on, predominantly affecting Gross Domestic Product (GDP)".1

Post-pandemic economic update and position of Pakistan

While commanding an extensive lock-down in response to the first wave of COVID-19, there were lots of primary challenges existing regarding this COVID-19 pandemic, the Pakistani Government has been efficiently implementing localized lock-downs to cut back the virus (infection) spread leading to economic activity mostly persisting.

Pakistan's stock exchange is at present at its most reduced level in five years. This outbreak driving unfamiliar financial backers to pull out of their portfolio ventures since enterprises infected with COVID-19 are impacted by the barricade, coming down on the securities exchange.

The extent of Pakistan's interests used as a level of GDP has fluctuated between 0.2 percent and 1 percent of GDP during the earlier 10 years, a figure that is significantly underneath what is expected to save general health.2

In July-December 2021 (H1 FY22), pointers have typical indications of the positive economic drive. With continued upgrading in community mobility and still vigorous official allowance inflows, private expenditure is estimated to have made stronger. Correspondingly, the asset is also expected to have augmented with strong growth of machinery imports and government development expenses. Government expenditure also grew strongly with the vaccination guard. On the production side, agricultural output, mostly sugarcane, and rice rose reflecting better weather provisions. Likewise, large-scale developed growth increased to 7.5%y-O-O H1 FY22, higher than the 1.5% for H1FY21. In contrast, commerce and customer self-assurance have dropped since June 2021, partly due to concerns about the higher interest rates and inflation.

Caption inflation increased to an average of 9.8% y-o-y in H1 FY22 from 8.6% in H1 FY21, motivated by a surging weaker exchange rate and global product prices. In the same way, the center of inflation has been rising since September 2021. The State Bank of Pakistan has been winding down its expansionary monetary posture since September 2021, increasing the policy rate by a growing 275 basis points (bps) and banks' cash reserve prerequisite by 100 bps.

The current account deficit (CAD) in H1 FY22 extended to US$ 9.0 billion, from an excess of US$1.2 billion innH1 FY21, as imports values rushed by 54.4%, doubling up the 27.3% growth in exports values. Double-digit expansion in transmittals in H1 FY22 facilitated the financing of the record-high trade deficit. The economic account recorded net inflows of US$10.1 billion, sustained by the new IMF SDR allotment, short-term Government deposits from Saudia Arabia, and a Eurobond issuance in July 2021. In January-February, the Government acquired US$2.1 billion from International Sukuks and then IMF Extended Fund Facility (EFF). Regardless, of these inflows, foreign change reserves had fallen to US$13.5 billion by March 25, 2022, equal to 2.0 months of imports of supplies and services. In the intervening time, the Rupee devalued by 14.3% against the US$ from July 2021 to end of the March 2022.

Although Pakistan got high tax returns, the economic deficit broadens by 20.6% in H1 FY22 due to higher expenditure on vaccine acquirement, arrangement of power sector arrears, and development projects. Public debt, counting guaranteed debt, accomplished 70.7% of GDP at end of December 2021. To accompany the tighter economic policy, the Government endorsed a Supplementary Finance Bill in January 2022, withdrew tax exceptions, and hold back on federal development expenses, whilst defending social sector spending.

Post-pandemic Government policies against COVID-19 economical effects

With the improved labor market conditions and monetary recovery, poverty evaluation at the lower-middle-income class poverty line of $3.20 PPP 2011 per day is estimated to have turned down from 37.0% in FY20 to 34% in FY21. Getting higher energy and food inflation is anticipated to reduce the actual buying power of the family circle, dis-proportionally distressing poor and vulnerable family units that use up a larger share of their resources on these items. In return, the Government launched the targeted food subsidy program (Ehsaas Rashsan Riyat) in February 2022.