Coronavirus may cause $61m loss to Pakistan: ADB

In worst case scenario, country may face up to $5 billion loss

Shahbaz Rana March 06, 2020
ISLAMABAD: The Asian Development Bank (ADB) has projected that Pakistan’s economy may face $16 to $61 million losses due to coronavirus outbreak, said a report published on Friday.

However, the report gave a “hypothetical worst case scenario” that shows Pakistan’s economy sustaining a whopping $5 billion loss due to spread of the virus also called COVID-19. In this case, Pakistan’s GDP will loss 1.57% and 946,000 people will be unemployed.

The report showed that the global GDP will also be affected from $77 billion in best case scenario to $347 billion in worst case scenario, with China affected the most.

In a one-page paper issued by Tola Associate – tax and corporate advisors – it was also claimed that Pakistan’s economy will sustain $5 billion loss due to coronavirus. The firm based its claim on an ADB publication.

According to the estimates published by the ADB the impact of the coronavirus, in terms of the global GDP ranges from $77 billion in best case scenario to $347 billion in worst case scenario, or 0.1% to 0.4% of the global GDP.

The report said the total losses likely to be sustained by Pakistan will be only $16.23 million in best case scenario. It projected that in best case scenario, Pakistan’s agriculture and mining sector could sustain a loss of $5.5 million; business trade, personal and public service $5.54 million; hotels and restaurants $0.67 million;  light and heavy manufacturing $3.6 million and transport services $0.92 million.

In moderate case scenario, the projected losses to be faced by Pakistan are $34.2 million. In worst case scenario, the projected losses to be faced by Pakistan are $60.8 million.

In the worst case scenario, Pakistan’s agriculture and mining sector will face $21.7 million losses; business and trade $18.8 million losses; hotel and restaurants $2.4 million losses; light and heavy engineering $14.6 million losses; and transport services $3.4 million.

While discussing the hypothetical worst case scenario, the ADB projected that Pakistan’s economy will lose $5 billion. There will be $1.5 billion loss to agriculture and mining; $1.94 billion to business and trade; $253.7 million in hotel and restaurants; $671 million to light and heavy engineering and $565.6 million loss to transport services.

In addition to the global slowdown, the fear caused by the COVID-19 is going to cause an estimated loss of $1.5 trillion across the globe in hypothetical worst case scenario. The lockdown has slowed down the pace of the Chinese economy, if compared to the last 30 years.

Coronavirus losses will depend on the magnitude of the problem and the scale of the underlying uncertainties in countries which have strong trade and production linkages with China, according to the Tola Associate.

According to the ADB estimates, around 946,000 people will be unemployed in Pakistan in hypothetical worst case scenario.  The net effect of the drop in oil prices due to coronavirus is neutral, yet alarmingly negative for the economy of Pakistan.

If this crisis prolongs, it will eventually lead to a significant increase in expenditures; a further slowdown in tax collection; a rise in inflation; and an increase in fiscal deficit.

The drop in consumer savings’ will also affect an already depressed demand, leading to a further slowdown in the economy, according to the advisory firm.

Exports will temporarily increase because of the lockdown and seize of trade with China.


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