KARACHI: Pakistan’s economy could suffer a financial fallout ranging between $16 million to $61 million from the coronavirus outbreak, an Asian Development Bank (ADB) report said on Friday.
The ADB has projected that in its most optimistic scenario, the fallout would hit Pakistan’s agriculture and mining sectors to the tune of $5.5 million in losses. Business trade, personal and public services are estimated to suffer losses of $5.54 million, light and heavy manufacturing $3.6 million, and transport services $0.92 million. In the worst-case scenario, the figures drastically increase approximately four-fold across all sectors.
The Asian lender has categorized losses to Pakistan’s economy based on best and worst-case scenarios depending on how long the virus takes to be contained. The bank has forecasted that at the very minimum, the national economy will suffer losses of $16.23 million, with optimistic global losses projected at $77 billion.
In the worst-case scenario, Pakistan is likely to suffer losses up to $61 million, the report said, with global losses of $347 billion. However, in an extreme scenario where the virus takes beyond six months to be contained, Pakistan’s losses have been projected at a massive $5 billion or 1.57 percent of the country’s GDP, with 947,000 people losing their jobs.
“The impacts [of the outbreak] can be seen in the country’s airline industry, hotel, and tourism sectors because of travel restrictions as precautionary measures taken globally,” Dr. Athar Ahmed, senior economist, and international marketing expert told Arab News on Saturday.
Pakistan is also expected to suffer heavy losses on the trade front due to the delays of inbound and outbound shipments to China.
“The raw material that comes from China for export and import substitution industry is delayed and due to this situation, Pakistan is turning to other countries for raw material which may increase the cost of business,” Syed Mazhar Ali Nasir, patron-in-chief of the Pakistan China Business Council (PCBC) told Arab News.
“Exports of goods from Pakistan which were started after the implementation of the Free Trade Agreement, allowing for certain products including fruits and vegetables, has also been impacted,” he added.
But some economists and traders are looking on the bright side of the crisis, and say the impacts of the virus outbreak in Pakistan could be a blessing in disguise.
“This is a blessing in disguise for Pakistan because the prices of oil have come down to around $46 a barrel, which will provide a cushion to Pakistan in making payments for oil imports. Ultimately we will see some relief in current account deficits,” Dr. Abdul Qayum Suleri, a member of the government’s Economic Advisory Council (EAC), told Arab News.
“It also offers long term opportunities for Pakistan to enhance its exports as a substitute to Chinese products to fill the gap-- but that depends on how much our industry is prepared,” Suleri added.
PCBC’s Nasir agrees.
“Exports could increase to countries which used to buy from China as imports from China face delays or restrictions,” he said.
The ADB has forecasted that China’s own economic losses in the hypothetical worst-case scenario could be a whopping $237 billion. In ADB’s best-case scenario, China will suffer economic losses of $44 billion.
The novel coronavirus has spread to 90 countries, affecting over 100,000 people and causing more than 3,200 fatalities. Increasingly, the economic impacts of the virus are being felt around the world and especially in China, the world’s second-largest economy, which ground to an economic standstill as part of containment procedures.
“In the long term, there is a lesson for China to learn from the epidemic,” Suleri said.
“Instead of keeping all its manufacturing facilities within the country they should look at relocating some of their industry to other countries and Pakistan is one of the potential host countries.”