Pakistan estimates GDP growth to slow by up to 1.3 points due to coronavirus

ISLAMABAD: The Planning Commission estimates that the ongoing coronavirus pandemic could force GDP growth to slow down by 0.8 to 1.3 percentage points to 2-2.5% this year, according to a The News report.

All other macroeconomic targets will consequently have to be re-adjusted due to the expected slowdown in growth. 

When contacted, Deputy Chairman Planning Commission Mohammad Jehanzeb Khan said, “The COVID-19 pandemic has rattled global markets and economies with breakneck speed. The impact has also adversely affected emerging markets, including Pakistan”.

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“Effects of the virus will be wide-ranging, from depressed international trade, lower foreign remittances, suppressed GDP growth to a reduction in government’s revenues (and increase in expenditure) and impact on the real economy which will lead to high unemployment figures. While it is hoped that the virus may be contained in the foreseeable future, the economic impact is likely to reverberate well beyond the short-term horizon,” he explained.

An important meeting was held on Thursday here at the P-Block on video conference in which ministries and donors’ representatives participated.

The top official said that the UNDP resident coordinator was assigned to coordinate with different UN agencies and multilateral as well as bilateral donors with the mandate to come up with exact losses incurred to the Pakistan economy.

“The UNDP shared a detailed report with the Pakistani side on Thursday during this official meeting to identify social and economic aspects that will have a far-reaching negative impact on the economy of Pakistan,” said the official sources.

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The World Bank high-ups also presented initial findings to identify sectors for the preparation of an action plan for mitigating the social and economic impact of the COVID-19 pandemic. 

During the meeting, sources said that one member of the Planning Commission had raised objections asking why multilateral donors were assigned to prepare an action plan for Pakistan’s economy in the presence of the Planning Commission and its research arm, the Pakistan Institute of Development Economics (PIDE), which employ plenty of economists, specialists and researchers belonging to all fields.

However, one official replied to the objection saying that donors’ endorsement was necessary, indicating that Islamabad intended to seek more foreign loans from donors to overcome its economic woes.

The official said that the National Coordination Committee (NCC) constituted by the government had tasked the deputy chairman of the Planning Commission with assessing the exact economic and social losses caused by the outbreak of coronavirus in the country.

The Planning Commission has since summoned meetings of all ministries/divisions and attached departments as well as provinces to come up with their expected losses.

On the sidelines, they have asked the UNDP to coordinate with UN agencies and other multilateral and bilateral donors to make their own assessment. Now the Planning Commission and UNDP have prepared their reports so the government will reconcile these estimates.

The Planning Commission high-ups expect GDP growth slowdown in the range of 0.5 to 1.3 points, but authorities termed the 0.5 point loss estimate as “conservative and bureaucratic” and stated that losses were obviously on the higher side. 

They estimated that the losses on GDP front stood in conservative estimates in the range of 0.8 to 1.3 points at least and its effects would also continue impacting GDP growth for the next fiscal year as well so that next year’s projected target can be slashed down.

It is expected that the manufacturing, international and retail trade, agriculture and services sectors will be impacted negatively over the next six months at least.

A representative of the UNDP has presented a detailed report of 65 to 70 pages stating that they have set up a secretariat in their office for coordination with donors for assistance to Pakistan to overcome the challenge of the COVID-19 pandemic.

The WB is expected to share its action plan for socio-economic front probably next week.