According to the Pakistan Economic Survey 2019-20, the Government expects a V-shaped economic recovery to be highly likely when coronavirus spread slows down.
It has been identified that the country was on its way to stabilization until the pandemic hit, and therefore any evaluation of economic performance on both pre- and post-COVID-19 basis should be made.
The pre-pandemic situation was marked by exceptional external front change, led by a 70.8 percent decrease in the current account deficit in July-April FY20 to $3.3 billion. “It was due mainly to a 29.5pc contraction in the trade deficit and a 5.5pc increase in the remittances of the workers.”
This was complemented by a rise in foreign direct investment in July-March from 137.3pc to $2.1bn, which the survey attributes to 28-place improvement in the ease of doing business index.
Similarly, changes were seen on the fiscal side, where the government also reported a primary surplus in 9MFY20, and tax collection growth year-on-year – despite 2019-20 missing.
In the post-pandemic situation, however, the economy has taken on a hit with GDP expected to shrink by -0.38pc in FY20. This is led by agriculture contributing an increase of 0.5 percentage points while the industrial and services sectors are projected to drag 0.52pps and 0.36pps down the overall growth figure.
Although agriculture has been largely immune from the effects of coronavirus, among other sectors, the document paints a bleaker image. It says, “72pc of Pakistan’s non-agricultural workers are working in the informal sector, with no social security or insurance cover and maybe hit hard. The estimated size of informal employment in the non-agriculture sector is around 27 million, with only food, pharmaceuticals, and few services still functional, these employees will be worst affected.”
This was coupled with easing on the monetary front that included the key interest rate cut to 8pc by 525 basis points as well as multiple refinancing schemes to help companies stay afloat.