30% plunge in the global oil prices has changed the entire economic outlook however, it happened to be good news for Pakistan’s macro and micro-economy.
The slump in oil pricing can help the country to save $4 to $5 billion in the import of gas and oil which will automatically allow various businesses to get cheaper financing for new and already running production lines.
In a recent report “‘Oil Price Mayhem – A Boon for Pakistan’s Economy” Arif Habib Limited Head of Research Samiullah Tariq said, “Pakistan is a net importer of oil with petroleum group imports contributing 25% to the total imports… [It] would be able to save $5 billion per annum on its imports.”
Pakistan meets more than 70% of the energy requirements through imports. According to the Pakistan Bureau of Statistics, during the current fascial year, energy imports are one-fourth of the overall imports i.e. $27.34 billion.
BMA Capital Executive Research Saad Hashmi said in a report, “We believe both Russia and Saudi Arabia can absorb low oil prices for a while due to lower production costs. This fact, in addition to the coronavirus epidemic, has the potential to keep oil prices under pressure in the near term.”
“As the global economic activity resumes to original levels (expectedly sometime in summer), we believe the demand for oil to rise in tandem,” he added.
The abrupt drop in the prices of oil would ease the citizens. An expected slowdown in inflation reading should reduce kitchen expenses. Partial pass-on of the massive drop in international oil prices to domestic consumers and its wide positive impact on business and economy, should all help people to reap the fruits.