
The Moody’s encouraging forecast is based on a few steps taken by the federal government to offset the impact of a month-long coronavirus lockdown in the country that has started easing from April 15. The first and foremost is the government’s permission to labour-intensive industries like agriculture, construction and textile to resume operations — something that is likely to aid a gradual recovery in domestic consumption.
Moody’s assessment also takes into account certain steps taken by the SBP which are expected to “further buffer the economic shock related to coronavirus”. These steps include bringing down the benchmark interest rate to 9% from 13.25% over a period of 30 days to provide cheaper working capital to the businesses in a bid to spur commercial activities; besides launching certain schemes for providing easy loans to industrial and construction sectors as well as to the owners of business concerns to help them retain their employees.
Further, Moody’s expects that a gradual revival in economic activities in Pakistan will help the country’s economy “to grow by more than 2%” in the next fiscal year. However, a lot will depend upon the government’s persistence with the ease in economic lockdown, given the fears that the coronavirus pandemic is all set to peak over the next couple of months.
Published in The Express Tribune, April 25th, 2020.
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