According to the World Bank, Pakistan is expected to fall into a recession with the real GDP for fiscal year 2020 could contract by 2.2 % and a noteworthy decline in per-capita income.
The World Bank released its latest report named ‘South Asia Economic Focus Spring 2020″ stated that Pakistan’ that says, “Pakistan, which has already experienced low growth rates in recent years, could well fall into a recession. With 1.8 percent population growth, that would imply a painful decline in per-capita income.”
South Asia is expected to witness the lowest economic performance in the last 40 years. Due to the unparalleled uncertainty, this report presents a range of forecasts, estimating that regional growth will fall to a range between 1.8 and 2.8% in 2020, down from the 6.3% forecast six months earlier.
As the tourism has dried up in Maldives, its GDP is projected to fall by 8.5 to 13% this year. However, the full spectrum of their projected GDP growth for this fiscal year is in negative territory for Afghanistan, Pakistan, and Sri Lanka, too. The entire country will experience a contraction of GDP in a worst-case scenario, the report says.
The real GDP for fiscal year 2020 could contract by 2.2% before recovering marginally to 0.3% growth in fiscal year 2021, if coronavirus lasts longer than expected.
As of February 2020, the rapid spread of the COVID-19 virus has brought economic activity to a near halt. The country has mostly been put under a partial lockdown. The decline in domestic and global demand is also aggravating the industrial sector’s woes, which are hit by shocks in both supply and demand. In addition, due to its labor strength, the country’s main manufacturing sector – textiles and apparel – is heavily exposed to COVID-19 related disruptions. As a result, the real GDP growth in fiscal year 2020 is expected to fall by 1.3%.
Real GDP growth is predicted to contract by 1.3% in fiscal year 2020 as domestic and global economic activity slows sharply in the last four months of fiscal year. COVID-19 outbreak will affect development beyond 2020.
However, growth in fiscal year 2021 will remain muted at 0.9% before reaching 3.2%in fiscal year 2022. Inflation is projected to decrease slowly afterwards by an average of 11.8 % in 2020.
For Pakistan, 54% of manufacturing exports contribute to the sub-sectors of textiles and fruit, beverages and tobacco. Bangladesh and Pakistan, the largest exporters, will suffer greatly, partially because the countries that suffered the worst outbreaks are the worst purchasers of clothing from these two countries as well.