Economic realities

Given the pandemic challenges for the national economy, are there new opportunities as well?

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The Covid-19 pandemic has shattered the world economy and brought things to a virtual standstill. Several international organisations including the World Bank, the International Monetary Fund and the International Labour Organisation have made grim forecasts suggesting that most economies will shrink, leading to huge job losses and closure of some businesses. Financial aid and debt relief packages have also been announced for countries whose economies have come under severe pressure and for whom providing sustenance to their citizens has become a big challenge.

In Pakistan too there is a realisation that things in the post Covid-19 world are not going to be as they were before and there will be major changes in the way business is done. Many businesses risk becoming obsolete. But given the challenges, are there also new opportunities that the country can benefit from? And how realistic are such assessments?

Let’s start with petroleum products. The crude oil prices are at their lowest. This will give Pakistan an edge in terms of a smaller import bill. The low oil prices will also make it cheaper for Pakistan to produce thermal electricity and bring down the cost of production. This point has been raised by senior government functionaries on many occasions and broadcast on government and private media. However, it has been pointed out by other experts that the only way to benefit from cheap oil is for the industry to be running and for business activity to continue. But the fact is that there is very little business activity currently on account of strict social distancing rules.

Another challenge cum opportunity is the imperative for self-sufficiency in terms of basic needs, especially in terms of food required to feed the populace, now that the movement of cargo is no longer as smooth and reliable as before. Zahid Hussain, a dealer in agricultural products, tells The News on Sunday that the basic concern of citizens is feeding themselves and their families. He says all other needs are becoming secondary. “The uncertainty around how long this pandemic will go on has forced people to defer other purchases.” He urges the government to sponsor high quality research in agricultural research institutes, introduce high-yield seeds and get bumper yields.

Zahid Hussain, a dealer in agricultural products, says that the basic concern of citizens now is feeding themselves and their families, with other needs becoming secondary. 

Mian Nauman Kabir, chairman of the Pakistan Industrial and Traders’ Associations' Front (PIAF) says that with the fall of rupee’s value against dollar, Pakistani exports have become attractive for foreign buyers. However, the importing countries are now fighting the pandemic and are not keen on receiving these on an urgent basis.

Kabir says, what had appeared to be an opportunity has turned into a challenge. He says most of the Pakistani exports go to the European Union. These have suffered because Europe has been one of the worst affected regions during the pandemic. For now, textile factories producing hospital apparel like bedsheets, surgical masks etc are getting export orders and some of them have been asked to convert their clothing orders to those of these currently needed products. Similarly, surgical goods produced in Pakistan are being sought in large numbers in advanced countries.

Kabir says some of the factories are open but to sell their produce locally they need wholesale markets and retail outlets which are closed. He requests the government to allow the opening of these markets subject to appropriate SOPs. Since implementing the SOPs has a cost, he says, the products produced at the factories operational at the moment are costlier than before. However, some people think that the industrialists are profiteering, he adds.

Pakistan can also focus on e-commerce, information technology, online education, digital banking etc because physical movement will take time to resume. Kashif, a delivery boy working for a food outlet, says people want contactless deliveries and even want food boxes to be disinfected before they are taken inside the house. He says customers are sent body temperatures of delivery boys so that they are aware of their health status. This way, restaurants that cannot accommodate people on their premises continue to operate.

But there are other sectors where immediate remedies are not in sight. For example, the travel and tourism industry, cinemas, sporting events etc are not possible right now. Whether an opportunity lies for them amid this chaos is yet to be known. A major fall in foreign remittances is likely in case Pakistani expats who lose jobs in struggling GCC economies are sent back home, says Naseem Chaudhry, an office-bearer of Pakistan Workers’ Federation (PWF).


The writer is a staff member. He can be reached at [email protected] 

Economic realities