I have written a number of articles on economic analysis but this time while writing, I have multiple fears as the whole world has become under the heavy grip of COVD-19 and sufferings are so harsh that economic indicators are also falling apart.
Being a strong believer in my Almighty Allah who is the mighty controller of all the resources and well-being of the world. Hypothetically believing that it is perhaps natural justice for equal distribution of world wealth already amassed the contractor of so-called world powers or it is still an attack on the third world to further suppress the worsening economy. Ultimately it is suffering the poor section of the world more than rich.
If it is a manmade virus then certainly it is motivated and well-planned action to further control the international resources and push the weaker economy even to make it weaker and if it is natural then it is certainly a curse and the world has to revisit the world economy to at least let the world survive to start the new life once again. The position of our economy has already gone worst and it is the beginning of invisible invader which has not yet been defeated. Our present economic indicators are that the inflation rate is 13% which is too high and it will continue to allow to increase the price hike. Our growth is below 2.2 though govt is claiming 3.3 by the end of 2020.
Our country is under heavy load of internal debt Rs. 32 trillion and it has to go even higher and the local bank should be happier as they earn more strength and rather local banks should transfer the foreign cash to Pakistan as Pakistan is paying more than 8 percent rate as compared to 2 percent international rate. I have information and others must be feeling this unfair assault on our economy.
A new Mafia has emerged with the name of “Currency Mafia” who is too powerful and too close to the decision-makers. You will note the local borrowing will increase by manifold and it will let happen. It is the test of prime minister as to how smartly he catches them or he will be forced to allow the mafia in the same way. Now the external debt $107 billion and IMF had already demanded its loan back and IMF will continue to increase its pressure and keep Pakistan forcing for more price-hike at the cost of the already crushed common man by the govt and IMF. The recent trench $6 billion has not been released and even if they do, it is retained under the garb of debt servicing.
Our Pakistan’s economy is already drowning in debts, instability, inflation and irreparable financial damages that are continuing to acute and our team was trying to handle without fixing it. Being a student of invention and behaviour of economic indicators are indicating the further slide of the economy and slipping of rupee therefore now I see further worsening of economy and our financial scientists have yet to give their negative trajectories and let see how they are going to control with our worst indicators. During and post coronavirus economic syndrome will bring a further major shock to our economy.
The economic indicators showed that our growth rate for 2019-20 was expected to be significantly lower from 3.3 in 2018 to 2.5 in 2020 and we are not able to achieve it. Therefore, there is the risk of a further massive decline in Pakistan’s domestic economic activity, especially in the agricultural industry which makes the more dominant contribution to our GDP growth. We are already facing a decline in our exports because of the conditions in developed country markets and exports are dropped. The stock market is also consistently under pressure and it is falling because of general economic distress. There has been a significant decline in foreign exchange reserves and more than 7 percent depreciation in the value of the rupee. It has affected our mid businesses growth rate and small business will either be shut or go for bankruptcy.
Consumption will reduce and more money will be drawn out of the companies account, some will be able to survive but the smallest companies will feel be eliminated. Our biggest question if we will survive from national bankruptcy due to this continued sliding economy and will we be able to do debt serving within our resources or not. We hope to survive from international bankruptcy but the business community will not be able to survive from bankruptcy. Let us see how we cope with the pandemic in the light of the government’s expenditures have been increased as the government has taken several steps including cutting the interest rate by 2.25%, petrol prices by Rs15 per liter and introducing an Rs150 billion aid package for the poor and labour classes.
I expect that this finical will become double in the coming days. Unfortunately, the wheels which get aye economic abilities have now come to standstill due to COVID-19 and this pandemic has shut the transport from train service till airplane service everything has been closed down by the government which is actually making it very difficult for the government to generate revenue. Tourism has also gone down to zero in the country since the virus outbreak. This ball of virus either manmade or natural has been set on rolling and destroying the economy of every country. It looks God has snatched the self-styled titles of world power and all of us can see the touch of interfaith harmony and everyone is looking towards Almighty Allah forgiveness. May God grant all of the forgiveness and give our world back to us.
China might benefit greatly after the crisis is over as it was the first country to be infected by the virus and to get out of it. The countries with the technocratic authoritarian model as China, Japan, Singapore and to some extent South Korea are dealing more effectively with the virus than the democratic ones like the Western and South Asian ones. These countries have efficiently tackled the disinformation elements in society to stop the spread of chaos and panic. While on the other hand, people in democratic societies who care about freedom, privacy, and individual rights, are much worried about their freedom after COVID-19 is over. It is yet to see which economy bears the more shocks and blows and which survives the less, as the pandemic is increasing rapidly and policies are changing and developing every now and then to deal with the crisis.
The coronavirus has obviously brought irreversible loss to the world economy. China’s Hubei province after suffering heavily has been able to cope with it because of its larger stronger economy. It has now spread its wings globally and there are now significant outbreaks around the world from South Korea to Italy, Australia, France, Germany and almost all of Asia.
The situation of pandemic predicts that the Gross Domestic Product (GDP) of the United States and China will decline by 2.4 percent, Japan by 2.7, Germany by 3.6 and the Russian economy will decline by 4.8%. In April 2020, almost every G20 member state made an attempt to minimise coronavirus pandemic effects for their respective nations. Out of all G20 countries, the US has passed the largest fiscal stimulus package that amounts to about 11 percent of its GDP amounting to about 2.3 trillion US dollars. Canada announced the stimulus package of 8.4% of its GDP, Germany of 4.9%, and Russia of 1.5 and China of only 1.2% since it has nearly taken control over the virus.
China’s economy in 2020 has expanded by 3.5% only which is the slowest in records back to 1980. The world has now entered the scenario 3 of coronavirus since it became a pandemic in scenario 2 and as of now, all the countries that had reported any cases as of the start of March i.e. the US, India, Pakistan the UK, Canada, and Brazil are facing an increase in its number. We the global village citizen are standing helplessly as the invisible enemy continues to attack and pushing the world to a blind end.
Pakistan needs to move requests to all the donators either to wave off our debts or give relief of 10 years interest-free period in view of this devastating COVD-19 pandemic.
The writer Rehman Malik is a PPP senator, former interior minister of Pakistan, and Chairman of think tank “Global Eye” and Senate Standing Committee on Interior.