Ministry unable to quantify virus impact on economy

By Asad Cheema

ISLAMABAD: The Ministry of Finance has said the magnitude of decline in economic growth due to coronavirus contagion remains uncertain while a new independent assessment puts the national output losses in range of Rs891 billion to Rs1.6 trillion in fourth fiscal quarter alone.
The Gross Domestic Product (GDP) for this fiscal year was projected to grow by 3% but the outbreak of coronavirus may affect Pakistan’s economy through various channels, according to the first Economic Updates that Ministry of Finance released on Tuesday.
‘There will be further reduction in GDP growth; however, the magnitude of decline is uncertain,’ noted the first of its kind monthly report. Pakistan’s domestic production and exports value may suffer due to less supply of intermediate goods and decrease in global demand and commodity prices. But former finance minister Dr Hafiz Pasha and the State Bank of Pakistan former governor Shahid Kardar have jointly published a comprehensive assessment of anticipated economic losses due to COVID-19 in an English daily.
The assessment is based on two assumptions ‘“ less severe shocks (scenario-I) and more severe shocks (scenario-II). ‘The GDP could fall by 4.6% in Scenario-I and by as much as 9.5% in Scenario-II in the fourth quarter of 2019-20,’ said the authors.
In absolute terms, they have estimated the GDP loss in the fourth quarter of 2019-20 at Rs891 billion in Scenario-I and Rs1.6 trillion in the event of a more severe shock.