THE State Bank of Pakistan (SBP) says the revised GDP growth target of three per cent was unachievable even af ter ignoring the impact of pandemic on the economy as the agriculture sector and large-scale manufacturing failed to compensate for subdued domestic market activity. In its second quarterly report on the state of economy, the central bank said the projections are likely to be revised downward further as the optimism from stabilisation is now subject to risks arising from the global and domestic spread of Covid-19. What the State Bank has said is in line with projections made by multilateral institutions for Pakistan as well as overall global economy, which is feared to contract because of the world-wide impact of the disease. The International Monetary Fund (IMF) projected Pakistan’s economy to shrink by 1.5pc during this fiscal year, compared to 3.3pc growth in 2018-19. These estimates are generally comparable with 1.3pc decline in the country’s economic output forecast by the World Bank on Sunday. Earlier, the Asian Development Bank (ADB) projected that Pakistan’s economic growth would slow down to 2.6pc during current fiscal year due to ongoing stabilization efforts, slower growth in agriculture and the impact of the COVID-19 outbreak. All this is understandable as the outbreak of the deadly virus has jolted all sectors of the economy and no one knows for how long the situation would persist. Apart from lockdown, the federal and provincial governments have also been forced by the circumstances to divert most of the resources, earmarked earlier for developmental activities, to the fight against Coronavirus, which also means subdued prospects for economic activities. Industrial sector, which was already facing numerous problems, would suffer badly due to long closure while components of the services sector like hoteling and tourism are also hit by constraints on mobility and requirements of social distancing. Though the prospects for wheat crop and livestock are encouraging, the decline in cotton production is likely to undermine the agriculture sector’s performance. The situation demands dramatic review of the overall budget-making strategy and the Government should engage representatives of all sectors of the economy into an intensive consultative process to seek their input on how best to heal the economy and shield the poorer segments of the society in the face of projections that millions more might fall below the poverty line
