Coronavirus: Pakistan's Exports Crash Amid Global Health Crisis

Pakistan Textile Industry was celebrating a big milestone with 20% jump in exports in February 2020 when coronavirus struck a heavy blow. Some western retailers canceled orders while others put them on hold as the virus spread to Western Europe and the United States in late February and early March. Then came the lockdown in Pakistan that shut down factories and halted transport in Pakistan.

Here's how Guido Schlossman, President and CEO of Synergies Worldwide, a global supply chain management firm with an office in Pakistan, summed up the situation for Sourcing Journal: “Most clients have either cancelled or put orders on hold...That would have huge ramifications and losses, and the fear is that most small factories may shut, whereas the mid and big factories will have huge financial liabilities and losses.” “Ninety-five percent of clients have either cancelled, put on hold or given new delivery dates ranging from 4-6 weeks delay to about 8-10 months,” Schlossman said. “That is how huge the holding period and losses would be for the factories.”

“All over Pakistan it’s a complete lockdown in all the provinces everywhere,” Hafiz Mustanser Ahmed, managing director of Lahore-based factory U.S. Apparel and Textiles, told Sourcing Journal last week. U.S. Apparel & Textiles, which typically produces 100,000 garments a day, is seeing “huge, huge” order cancellations, Ahmed said.

“The transportation when it comes to taking the employees to the factories or the public transportation, it’s all 100 percent closed. All the factories are closed.” For now, moving goods back and forth between the ports and Lahore, Pakistan’s second-biggest textile manufacturing hub after Karachi, is still allowed, but there simply aren’t many goods to move, said Ahmed, whose factory produces denim bottoms for Levi’s, Target, H&M, J.Crew, Primark and Costco, to name a few.

Other Asian garment exporting nations face a similar situation. Bangladesh has issued stay-at-home orders and India has ordered a 21-day nationwide lock-down. The difference is that Pakistan exports had just begun to recover when the COVID-19 global pandemic struck. Now demand for apparel in the western markets is not likely to materialize for at least a month or two. Meanwhile, job losses in Pakistan are almost certain. A prolonged slump in the west will spell disaster for Pakistan's exports and delay the nation's economic recovery.

Pakistan's service economy will also suffer in a prolonged lock-down. Service sector accounts for  50% of the world GDP and 54% of Pakistan's GDP.  Social distancing will significantly impact the services, particularly retail, restaurants, travel, transport and education sectors. Imran Khan has expressed fear that the pandemic will devastate the economies of developing countries. “My worry is poverty and hunger," Khan said. "The world community has to think of some sort of a debt write-off for countries like us, which are very vulnerable, at least that will help us in coping with (the coronavirus).”

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Riaz Haq said…
#Economic activities in #Pakistan continue as some retailers still buying. “Pakistan is expected to achieve some 50% export target this month (March)..US retail chain Costco is still taking supplies.." Govt trying to make sure #agriculture unhurt. #exports

The rice industry, whose exports are worth $2 billion a year, has also managed to operate. The government will not charge demurrages for delay in clearance of import and export containers at ports.

However, many other industries and services sector, except for the essential ones, will bear losses of billions of rupees due to lockdown in almost the entire country to contain the coronavirus pandemic. The Express Tribune tries to estimate damages to the national economy. “Pakistan is expected to achieve some 50% export target this month (March),” Pakistan Business Council (PBC) CEO Ehsan Malik said.

“The US retail chain Costco is still taking supplies from around the world. Besides, many Asian countries remain operational,” he said.

Pakistan’s average exports came in slightly lower than $2 billion a month in the first eight months (Jul-Feb) of the current fiscal year, according to the Pakistan Bureau of Statistics (PBS).

“We are trying to make sure, in collaboration with the government, that those export industries continue to operate whose orders have not been delayed and cancelled by the international buyers,” Malik said. The list of employees of the export industries and those which are considered essential industries and services have been provided to the government and the law enforcement agencies are letting them commute between factories and homes.

These industries include food, pharmaceutical, textile and fast moving consumer goods like soaps, shampoos and detergents, which also come under the essential goods category.

“Essential food and pharmaceutical industries cannot operate in isolation and that is why we have taken permission from the government to let the packaging and printing industry operate as well,” Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Anjum Nisar said.

“Soap and sanitiser manufacturing industries also come under essential goods manufacturers since we need the two products to protect people from coronavirus,” he said.

Malik voiced fear that exports may gradually drop to a very low level in the next three to four months, but stressed that they would gradually return to normal by December 2020. Besides, non-essential industries and services would be badly hit by the lockdown. Many big industrial units including the three Japanese car manufacturers (Toyota, Honda and Suzuki), big textile and cement-makers including Gul Ahmed, Interloop and Lucky Cement have stopped production, according to a private TV channel.

Giving a rough estimate as to how the lockdown would impact the overall economic activity, Malik said, “One-third of the industrial production may be impacted and the share of industrial production in the overall GDP (gross domestic product) stands at around 18%.”

The share of wholesale and retail stands at around 18-20% in GDP. “It may come down by around 20%.”

The share of services sector (like doctors, bankers, lawyers, barbers, tailors and cobblers) has increased to around half of GDP over a period of time. “A majority of them may feel the heat of the melting economy except for the financial sector,” he said. Malik said the agriculture sector, whose share in GDP stood at around 50%, would remain unhurt since the government was making sure that the ready-to-harvest wheat crop was procured to achieve food security.

The State Bank of Pakistan (SBP) revised down its projection for economic growth to 3% last week compared to 3.5% before January 2020.
Riaz Haq said…
Society has stopped for #coronavirus, but does it have to? Yale's Dr. Katz proposes identifying & quarantining ONLY those who are most vulnerable, and saving coronavirus tests and potential future treatments for them, end #lockdown for the rest. #economy,71525#.XoD-Ee7sVHM.twitter

"I fear our (current) efforts will do little to contain the virus, because we have a resource-constrained, fragmented, perennially underfunded public health system," Katz said. "Distributing such limited resources so widely, so shallowly and so haphazardly is a formula for failure."

The current plan of keeping everyone at home actually puts the most vulnerable — like those who are sick, or grandparents — in a much more precarious position. Because everyone, from all generations, are likely under one roof and interacting with each other, Katz said, the chances of the virus spreading among single families rises exponentially.

"As the virus is already circulating widely in the United States, with many cases going undetected, this is like sending innumerable lit matches into small patches of tinder," Katz said. "Right now, it is harder, not easier, to keep the especially vulnerable isolated from all others — including members of their own families — who may have been exposed to the virus."

This was an element that seemed to have caught Cuomo's attention, especially as some of his own immediate family — like daughter Cara — have returned home in the midst of the coronavirus crisis.

"Isolate people, but isolate the vulnerable people," Cuomo said, sharing his interpretation of Katz's proposal. "Don't isolate everyone, because most people are not vulnerable to (coronavirus). And if you isolate all people, you might be actually exposing the most vulnerable people by bringing in a person who is healthier, and stronger, and who may have been exposed to the virus."

Doing that — focusing on a "much smaller" portion of the population — could allow "most of society to return to life as usual, and perhaps prevent vast segments of the economy form collapsing," Katz said.

"Healthy children could return to school, and healthy adults go back to their jobs. Theaters and restaurants could reopen, though we might be wise to avoid very large social gatherings like stadium sporting events and concerts."

While Cuomo says he is looking for ways to bring society back to some normalcy, he doesn't regret his actions so far in trying to slow the spread of the coronavirus throughout the state.

"But I think there is a line," the governor said. "A spot where those to lines cross. You have to identify it, and that is what we're going to start to work through."

And the sooner that work can begin, the better.

"At some point you have to open the valve," Cuomo said, "because that is oxygen for the economy. Because this is not sustainable."
Riaz Haq said…
#Bangladesh #Garment Makers Say $3 Billion in Orders Lost Due to #coronavirus. The country is the world’s second largest exporter of #clothing after #China. #business #economy #COVID19
Riaz Haq said…
#Pakistan's #copper #export to #China up 400%
in 3 years from $106 million to $550 million in 2019. Metallurgical Corporation of China (MCC) that is #mining Saindak expects to grow export to $10 billion per year once Reko Diq is settled. #economy #CPEC

Pakistan has confirmed a 400 percent increase in the export of copper products to China in the recent year.

According to a report published by China Economic Net, this huge rise in the export of copper and other copper-related products from the country has helped to boost local industry.

Three year back exports of copper from Pakistan were of only 106 million dollars, however, In the year 2019, copper exports to China have risen to 550 million dollars.

The current rise in exports is seen though the largest copper reserves of Pakistan "Reko Diq project" which is under dispute at the international court of justice.

If the dispute settles down shortly then one of the biggest players in the copper industry of China, Metallurgical Corporation of China (MCC) that is mining in Saindak mines expects to take the export to $10 billion per year.
It is to be noted that mining and processing of copper requires a high-end technology and the expertise of Chinese copper processing companies like MCC have played a very vital role to develop the Saindak copper mines from the year 1995 onwards.

Talking to CEN, Director of Administration Office Song Guozhao said that Saindak Copper-Gold Project is designed to produce and process 12,800 tons of copper ores per day (4.25 million tons per year); currently, the output of copper blister is about 13,000 tons annually.

“By the end of February 2020, the project has a total of 1,977 employees, 256 Chinese and 1,721 Pakistani, of which the number of local employees accounts for 87% of the total,” he mentioned.

He stated that as the Pakistani managerial and technical personnel continuously improve their capacity, the company will further, carry forward the process of localized administration.

Saindak Copper-Gold Project composes of three ore bodies, that is the South, the North and the East Ore Bodies (SOB, NOB & EOB). The MCC has been working in SOB and NOB, and the mineable resources in the two ore bodies are going to run out soon.

The Chinese and Pakistani sides are in close communication on its feasibility. Since the other two ore bodies are going to run out of resources soon,

it is imperative to find supplementary resources so that the development of the project would be sustained, the employment of local people will be secured, and more continuous contributions will be made to local economy, Song said.

Saindak is an open-pit mining project rather than underground mining, so there is no sinking problem in the mining area. We have been operating the project for so many years and we have a good knowledge and understanding of the country, especially the mining industry, cultural environment, religious practices in Balochistan.

We also enjoy sound cooperation with federal and local governments and other partners in Pakistan. Given this, we are willing to expand our investment in the mining sector in Pakistan.

We are interested in the development of the H4 and Reko-Diq, and we hope that the Pakistani government will conduct international tenders for these projects as soon as possible, Song added.

Talking with CEN, Commercial Counselor of Pakistan Embassy in China Badar u Zaman said that the Pakistani government is eager to increase the exports of copper to China.

The commercial section of the embassy is putting huge efforts which have resulted in a 400 percent increase in copper exports in the last two years.
Riaz Haq said…
#Pakistan #informationtechnology (IT) #exports rise to $887 million in 8 months of current fiscal year 2019-20, strong 26.24% growth from $702.990 million during the same period last year. #tech -

PSEB Managing Director, Syed Ali Abbas Hasani, stated in his briefing that Pakistan’s IT & IT-enabled Services (ITeS) export remittances, including telecommunication, computer and information services, have surged to $887.470 million, showing a growth rate of 26.24 percent during the first eight months of the fiscal year 2019-2020 as compared to $702.990 million during the same period last year.

While the number of registered IT & ITeS companies have increased by a stellar 26.35%. He stated that Korean Exim Bank has principally agreed to give funding for the establishment of a state of the IT Park in Karachi and that training in emerging technologies of 2,000 fresh IT graduates and professionals working in the industry will start from May 2020.
Riaz Haq said…
#Islamabad Government Think Tank PIDE: #Coronavirus to cost #Pakistan #economy over $15 billion and result in 12 million job losses amounting to 20% of all employment due to #lockdown with moderate restrictions. #unemployment #poverty #hunger

The federal government of Pakistan has worked out the impact of losses of pandemic Covid-19 virus on some sectors of the national economy and shared the initial assessment that total losses stood at the whopping figure of Rs2.5tn (around $15.6bn).
Official estimates first time shared with a selected group of reporters in the aftermath of the outbreak of coronavirus reveal that under moderate restrictions, employment loss could be up to 12mn, around 20% of the employed labour force of the country.
The total labour force in the country stood at 60mn-65mn and moderate estimates calculated by the Pakistan Institute of Development Economics (PIDE), an affiliate of Planning Commission, showed that the lingering pandemic could result into unemployment ranging from 12mn to 20mn.
The PIDE had assessed that the monthly average losses of losing jobs stood at Rs180bn to Rs260bn, so in the worst-case scenario basis, the estimated losses could go up to Rs780bn in the next three months.
However, the government has decided to provide Rs4,000 monthly stipend to expected job losers.
The Planning Commission, under deputy chairman Planning Commission Dr Mohammad Jehanzeb Khan, worked out the initial losses caused by Covid-19 pandemic on a few selected sectors of the economy in consultation with ministries/divisions and international donors in more than last two-week period.
These estimates have been worked out such as government-owned/department business losses, tax revenues collected by the Federal Board of Revenue (FBR), massive reduction in import and export (trade figures losses) and these estimates did not include losses on account of GDP growth rate.
The top official said it was widely believed that the impact of the virus and the severity of lockdowns on the overall economy may have a severe impact on economic performance parameters.
'We have coordinated our efforts to assess the quickly evolving situation. Initial estimates put a business loss amount over Rs450bn for the fourth quarter (April-June) period of the current fiscal year.
Please bear in mind we continue to assess the situation and information from other sectors is coming, said the official.
When asked about more details, the official sources said that these were assessed through incurring losses of PIA, Pakistan Railways and other public sector entities.
They said that the Security and Exchange Commission of Pakistan (SECP) shared information that the stock market tumbled and it so far caused losses to the tune of Rs200bn to Rs250bn.
The government's business loss might escalate further because it did not include the overall losses on account of GDP growth and important sectors like agriculture, manufacturing and services sectors amid halting economic activities in all sphere of lives.
On the government's tax revenue side, the official said that it was expected that the FBR could see a decrease in revenue/cash outflow of around Rs600bn alone in the fourth quarter (April-June) period of the current fiscal year.
Initially, the FBR had estimated revenue losses of Rs380bn but they revised upward their losses in the wake of additional Rs200bn losses on account of deferment of utility bills, including electricity and gas and then release of stuck-up refunds to the tune of Rs100bn.
The official sources said that these figures of revenue losses were shared by the FBR.
Riaz Haq said…
Trying to beat #coronavirus in #Pakistan: 'So far we are managing it'. "I think lockdown was the only option - the only solution for this disease. "Our government took the step very quickly and after that we were able to control this ... spread." #COVID19

A Pakistani businessman said strict lockdown of the country's 204 million people was causing serious hardship, but it was saving lives.

The Al Jazeera news agency reported 40 deaths so far from Covid-19 in Pakistan, and more than 2600 cases of infection.

Aly Hossain is a businessman in the Punjab capital Lahore - a city of 12m, now in its 21st day of lockdown, after what was meant to be 14 days.

He said it was causing a lot of hardship, but there was little option for containing the spread of the deadly virus.

"I think lockdown was the only option - the only solution for this disease.

"Our government took the step very quickly and after that we were able to control this ... spread."

News agencies reported that Pakistan, despite its close proximity with China, remained coronavirus-free until the 26 February when a young man from Karachi tested positive after returning from Iran - one of the worst-hit countries.

After a brief hiatus following the first case, Covid-19 cases spiked as more pilgrims returning from Iran tested positive for the virus.

Hossain said Lahore was right now deserted, which he had never before seen.

"It feels like ... it's a very different kind of situation, right now. We have never seen it like this before, in my life.

"Everything is closed, businesses are closed and people are scared of what will happen in the future."

Hossain said the country faced many problems.

"I talk about my business, which is currently closed. I have to manage a little factory so we are closed, and we are at home and we don't do anything."

He said the government was trying to help but it did not have sufficient funds to relieve the scale of need.

The World Bank announced at the weekend it had approved a $US200m ($NZ340m) package to help Pakistan take effective action against the Covid-19 pandemic by strengthening the country's national healthcare systems and mitigating socio-economic disruptions.

The focus would be on the health sector, but would also help the poor and vulnerable cope with the immediate impact of the pandemic through social protection measures, food rations, and remote learning education.

Hossain supported his wife and young daughter, his parents and siblings, and said many were relying on charity and family to survive.

He was not sure when they might begin to see any improvement, but hoped it would be soon.

"We don't have any clear picture right now about what is going to happen but the government is telling us to prepare for 10 more days, then this lockdown will be over and we will be back to business."

Hossain said that in general, and despite the difficulties, the population seemed calm and hopeful of a good outcome.

"They are always very optimistic - they don't do panic and they always try to manage in any condition and in any situation, and so far we are managing it.

"We are hoping for the best."

The World Bank Group said in a news release at the weekend that it was rolling out a $US14 billion ($NZ24b) fast-track package to strengthen the Covid-19 response in developing countries and shorten the time to recovery.

The immediate response included financing, policy advice and technical assistance to help countries cope with the health and economic impacts of the pandemic.
Riaz Haq said…
#Coronavirus Pandemic Will Forever Alter the World Order. Triumphs like #polio #vaccine and eradication of #smallpox, or marvel of #medical #diagnosis through #ArtificialIntelligence, have lulled us into a dangerous complacency. via @bloombergdotorg

Drawing lessons from the development of the Marshall Plan and the Manhattan Project, the U.S. is obliged to undertake a major effort in three domains. First, shore up global resilience to infectious disease. Triumphs of medical science like the polio vaccine and the eradication of smallpox, or the emerging statistical-technical marvel of medical diagnosis through artificial intelligence, have lulled us into a dangerous complacency. We need to develop new techniques and technologies for infection control and commensurate vaccines across large populations. Cities, states and regions must consistently prepare to protect their people from pandemics through stockpiling, cooperative planning and exploration at the frontiers of science.

Second, strive to heal the wounds to the world economy. Global leaders have learned important lessons from the 2008 financial crisis. The current economic crisis is more complex: The contraction unleashed by the coronavirus is, in its speed and global scale, unlike anything ever known in history. And necessary public-health measures such as social distancing and closing schools and businesses are contributing to the economic pain. Programs should also seek to ameliorate the effects of impending chaos on the world’s most vulnerable populations.

Third, safeguard the principles of the liberal world order. The founding legend of modern government is a walled city protected by powerful rulers, sometimes despotic, other times benevolent, yet always strong enough to protect the people from an external enemy. Enlightenment thinkers reframed this concept, arguing that the purpose of the legitimate state is to provide for the fundamental needs of the people: security, order, economic well-being, and justice. Individuals cannot secure these things on their own. The pandemic has prompted an anachronism, a revival of the walled city in an age when prosperity depends on global trade and movement of people.

The world’s democracies need to defend and sustain their Enlightenment values. A global retreat from balancing power with legitimacy will cause the social contract to disintegrate both domestically and internationally. Yet this millennial issue of legitimacy and power cannot be settled simultaneously with the effort to overcome the Covid-19 plague. Restraint is necessary on all sides—in both domestic politics and international diplomacy. Priorities must be established.
Riaz Haq said…
Pakistan PM Seeks #Debt Relief for Developing Nations to Fight #CoronaVirus. #ImranKhan's appeal coincided with Wold Bank report warning of the worst economic performance in 40 years in #SouthAsia. #India #Pakistan #Bangladesh #economy #lockdown #COVID19

Pakistani Prime Minister Imran Khan appealed to the international community Sunday to provide developing countries with an urgent debt relief to help tackle the COVID-19 crisis facing them.

Khan made his “global initiative on debt relief” appeal on a day when a Wold Bank report warned countries in South Asia, including Pakistan, India, Afghanistan and Bangladesh, are on course to experience their worst economic performance in 40 years in the wake of the coronavirus outbreak.

In his nationally televised speech, Prime Minister Khan said the developed world is focused on containing the deadly pandemic through lockdowns and dealing with its economic impacts at the same time.

But he lamented struggling economies like that of Pakistan have been hit hard by restrictions on movement that have halted economic activity, caused widespread unemployment and triggered new challenges.

While stopping the virus from killing people, the “biggest worry” for the developing world now is that people are dying of hunger as a result of the lockdown , Khan lamented.

“The problem they face now is a lack of fiscal space. We don’t have the money to spend on already the overstretched health services and to stop people from dying of hunger.”

Khan insisted that rich countries have come up with trillions of dollars of relief packages for their people to offset immediate economic fallout, but that luxury is not available to his and other developing nations to manage the unfolding challenges.

“To give an example of Pakistan, with a population of 220 million, so far the maximum stimulus (relief package) we could afford is $8 billion, and this is the issue with most of the developing world,” he said.

Khan’s government rolled the largest social protection program in Pakistan’s history last week to pay nearly $1 billon to more than 12 million poverty-stricken families, or an estimated 80 million individuals, to help alleviate the economic fallout of the outbreak.

“Therefore, I will be appealing to the world leaders, to the heads of financial institutions, to the Secretary General of (the) United Nations to launch an initiative that will give debt relief to developing countries to combat the coronavirus.”

Pakistan, where an estimated 40% of people live in poverty, owes more than $100 billion debt to international lenders and a large chunk of the national budget is consumed by debt servicing.

World Bank Report

The world’s most populous region of South Asia which houses 1.8 billion people, “finds itself in a perfect storm” in the wake of the pandemic outbreak, according to the World Bank report.

It forecasted the regional growth is likely to drop to between 1.8% and 2.8% in 2020 from the pre-pandemic projection of 6.3%.

“Tourism has dried up, supply chains have been disrupted, demand for garments has collapsed and consumer and investor sentiments have deteriorated, international capital is being withdrawn and inflows of remittances are being disrupted,” the report warned.

Unlike other nations worst-hit by COVID-19, South Asian countries have so far reported fewer than 15,000 cases of infections, with India, the largest country in the region accounting for more than 8,000. Pakistan recorded 5,200 infections, with at least 88 deaths, as of Sunday.

But experts fear the region, with some of the world’s most densely populated cities, could become the next coronavirus hotspot.

Riaz Haq said…
World Bank: South Asia Economic Focus, Spring 2020 : The Cursed Blessing of Public Banks

The economic outlook for South Asia is dire. South Asia will likely experience the worst economic performance of the last 40 years. Because of the unparalleled uncertainty, this report presents a range forecast, estimating that regional growth will fall to a range between 1.8 and 2.8 percent in 2020, down from 6.3 percent projected six months ago. Hardest hit is Maldives where GDP is expected to decline by between 8.5 and 13 percent this year, as tourism has dried up. Also, for Af- ghanistan, Pakistan, and Sri Lanka, the full range of their forecast GDP growth for this fiscal year is in negative territory. In a worst-case scenario, the whole region would experience a contraction of GDP.
The dire forecast is based on the analysis of several adverse impacts. South Asia finds itself in a perfect storm. Tourism has dried up, supply chains have been disrupted, demand for garments has collapsed, consumer and investor sentiments have deteriorated, international capital is being withdrawn and inflows of remittances are being disrupted. On top of the deterioration of the international environment, the lockdown in most countries has frozen large parts of the domestic economy.
The crisis will reinforce inequality in South Asia. Even more worrisome than the grim macroeconomic outlook is the realization that the impact on the poorest in the population will be much harsher than the consequences for more affluent people. Analysis shows that poor people have a higher likelihood of having lost their work, and domestic migrant workers who had escaped rural poverty by finding work in cities are being forced back into rural poverty again. Many of the poorest face higher risk of food insecurity.
Policy makers are in unchartered territory and must consider innovative policies. In their immediate response, the fo- cus has been rightly on mitigating the spread of COVID-19. While doing that, conditions should be created to jumpstart the economy, once countries emerge out of the immediate health crisis. A combination of temporary work programs and a moratorium on debt servicing and rent payments could help prepare for the restart of the economies. After tackling the immediate COVID-19 threat, South Asian countries must keep their sovereign debt sustainable through fiscal prudence and debt relief initiatives. In the longer run, South Asia would do well by diversifying its international connections, while there are great opportunities to expand digital technologies for payment systems and distant learning to unlock remote areas in South Asia.
Riaz Haq said…
Pandemic a 'perfect storm' for South Asia, World Bank says
AFP | Dawn.comUpdated April 12, 2020

South Asia is on course for its worst economic performance in 40 years, with decades of progress in the battle against poverty at risk, because of coronavirus, the World Bank said Sunday.

India, Bangladesh, Pakistan, Afghanistan and other smaller nations, which have 1.8 billion people and some of the planet's most densely populated cities, have so far reported relatively few coronavirus cases but experts fear they could be the next hotspots.

The dire economic effects are already much in evidence, with widespread lockdowns freezing most normal activity, Western factory orders cancelled and vast numbers of poor workers suddenly jobless.


In its brief on Pakistan, the report noted: "Pakistan made considerable progress toward macroeconomic stabilisation during the first 8 months of FY20. Measures taken by the authorities helped reduce domestic and external imbalances although at the cost of dampened economic activity. Covid-19 pandemic related disruptions have further strained economic activity.

"Output is expected to contract sharply in Q4-FY20, bringing overall FY20 growth to -1.3 per cent. These developments have put pressure on Pakistan’s fiscal position, as tax collection is being adversely impacted while spending needs are increasing.

"The rapid spread of the Covid-19 virus since February 2020 has brought economic activity to a near halt. Most of the country has been placed under a partial lockdown. The closure of non-essential businesses and domestic supply chain disruptions are having a significant impact on wholesale and retail trade and transport, storage and communication, the largest sub-sectors of the services sector.

"The informal sector and daily wage workers employed in the formal sector are expected to bear most of the costs of expected slowdown in internal demand. The informal sector accounts for 72 percent of employment while informal workers in the formal sector account for another 5 per cent of the total. The expected reduction of employment and incomes in the informal sector will have negative impact on poverty, particularly in urban areas."

Real GDP growth is projected to contract by 1.3 per cent in FY20 as domestic and global economic activity slows down sharply in the last four months of the fiscal year, according to the report. "The outbreak of Covid-19 will impact growth beyond FY20. Under the baseline scenario, growth will remain muted at 0.9 per cent in FY21 before reaching 3.2 per cent in FY22.

"Inflation is expected to average 11.8 per cent in FY20 and to gradually decline thereafter. The current account deficit is projected to narrow to 1.9 per cent in FY20, as imports contract more than exports."

"The fiscal deficit is expected to remain elevated, at 9.5 and 8.7 per cent of GDP in FY20 and FY21, respectively. Revenue mobilisation efforts will be negatively impacted by subdued domestic activity, while expenditures will increase to contain the spread of Covid-19 and support the economy.

"The fiscal deficit is expected to fall gradually to 6.0 per cent of GDP by FY22 as the impact of the crisis tapers-off."
Riaz Haq said…
'Starving' #Bangladesh #garment workers protest for pay during #coronavirus #lockdown. BD apparel factories account for some 84% of its $40 billion export sector, which is facing a crisis after H&M, Walmart, Tesco and others cancelled orders- France 24

Thousands of garment workers who produce items for top Western fast fashion brands protested against unpaid wages in Bangladesh's streets Monday, saying they were more afraid of starving than contracting coronavirus.

Bangladesh's apparel factories account for some 84 percent of the country's $40 billion export sector, which is facing its worst crisis in decades after retailers including H&M, Walmart and Tesco cancelled orders because of the pandemic.

Protesting workers say many factories have not paid them after the orders were cut.

Workers shouted slogans such as "we want our wages" and "break the black hands of the owners" as they blocked roads despite a nationwide lockdown to combat the spread of the deadly disease.

"We are afraid of the coronavirus. We heard a lot of people are dying of this disease," protesting worker Sajedul Islam, 21, told AFP.

"But we don't have any choice. We are starving. If we stay at home, we may save ourselves from the virus. But who will save us from starvation?"

The lockdown, which started on March 26, also forced the closure of the vast majority of the country's garment factories.

"We have not been paid for two months. We are starving," said another protester, who gave her name as Brishti, from the Tex Apparel factory in the capital Dhaka.

"If we don't have food in our stomach, what's the use of observing this lockdown?"

Some 5,500 workers protested on Monday while 20,000 turned out on Sunday, police inspector Islam Hossain told AFP.

"Some workers broke doors and glasses of a factory. But they were largely peaceful," Hossain told AFP. No one was arrested.

Bangladesh has announced $590 million in loans for export-oriented factories to pay workers.

The South Asian nation is the world's second-biggest garment maker after China, with $35 billion dollars of exports a year.
Riaz Haq said…
Some Nations Face an Awful Question: #Death by #Coronavirus or by #Hunger? So far, 90% cases and deaths are in countries with average temp under 63 deg Fahrenheit, and most of those are rich, developed countries. #US #UK #Italy vs #India #Pakistan- NYTimes by Ruchir Sharma

Though many rich economies have ground to a halt under strict lockdowns to contain the coronavirus, many low- and middle-income countries have decided they can’t afford an all-out fight. Brazil’s president has taken the most controversial stand against shutdowns, saying “we’re all going to die one day,” but he is not alone.

A recent study by UBS, the Swiss bank, found that emerging nations account for most of the “moderate” lockdowns and few of the “severe” lockdowns. Turks between the ages of 20 and 65 are still on the job even as confirmed cases soar. Pakistan has left open key export industries, including textiles. For nations that lack a social safety net, “full lockdowns will only lead to more hunger, starvations and death,” says Luhut Pandjaitan, a senior minister in Indonesia, which was slow to issue travel restrictions and stay-at-home orders.

So far, 90 percent of the reported cases and deaths are in countries where the average temperature is under 63 degrees Fahrenheit, and most of those are rich, developed countries of the Northern Hemisphere. The worst of the economic and financial fallout, however, is hitting the warmer nations of the emerging world, which is now expected to experience its first contraction in the post-World War II era.

The full economic damage has to yet to be assessed, as growth forecasts for 2020 keep falling, but the financial carnage registers daily. While stocks in the United States have hit a bottom 35 percent below their all-time highs, this drop is similar to one in a bear market during a recession, and barely half as bad as in 2008. Six major emerging markets — including Brazil, Turkey and Mexico — have seen falls of more than 70 percent from their all-time highs, and many are trading below their 2008 lows. If there is any silver lining here, it is that the scale of these crashes suggests that markets have already “priced in” more bad news to come for the hardest-hit emerging economies.

This is only the eighth global recession in the past century, and it is confronting emerging countries with unique challenges. They don’t have the resources to match the enormous stimulus programs that are preventing an even deeper recession in the developed world. Their crowded living conditions make it hard to slow the pandemic with social-distancing rules. And if emerging nations do impose lockdowns, their weak welfare systems can’t support unemployed workers for long.

The United States has already committed to spend a sum equal to nearly 10 percent of its annual economic output on stimulus measures to keep growth alive. Germany, Britain and France plan to spend 15 percent or more. But rich nations have the capacity to borrow and spend freely, because in general global markets trust them to make good on their payments, no matter how large.

But the balanced budgets have deteriorated into large budget deficits. When the pandemic hit, many big emerging economies like those of South Africa, Nigeria and Argentina faced a large “twin deficit” in both the government budget and the current account — a measure of how much nations need to borrow abroad to finance their spending habits. Now spooked investors are fleeing to the relative safety of the U.S. dollar, weakening the currencies of emerging economies — and further undermining their ability to pay their bills.
Riaz Haq said…
India, Pakistan plan to restart some #economic activity during #coronavirus #lockdown. Top leadership in Pakistan to meet Monday to decide. #India has 9,152 confirmed cases, including 308 deaths. #Pakistan has 5,374 cases, including 93 deaths. #economy

India and Pakistan are planning to partially reopen their economies to minimise the cost of restrictive measures imposed to halt the spread of the novel coronavirus, officials in the two countries said on Monday.

Indian Prime Minister Narendra Modi said on Twitter he will address the nation on Tuesday, at the end of a 21-day lockdown that has severely disrupted economic activity and left millions of its 1.3 billion people out of work.

Two Pakistani cabinet ministers told Reuters the civil and military leadership would meet on Monday to decide whether to extend countrywide restrictions there beyond April 15.

The World Bank has said economic growth in India and other South Asian countries is likely to be the slowest for four decades this year because of the coronavirus outbreak.

Although India’s shutdown is likely to be extended as most states have requested, officials say its terms could be softened to help households and businesses.

Modi has asked his cabinet colleagues to come up with plans to open up some crucial industries, a government source involved in the deliberations said.

A government note seen by Reuters said some manufacturing could be restarted, with firms in the autos, textiles, defence and electronics sectors allowed to operate at 25% capacity while ensuring social distancing.

“As the prime minister has indicated, we will have to move towards economic activity, while taking utmost care of the lockdown and social distancing,” said Manohar Lal Khattar, chief minister of the northern state of Haryana.

He said he planned to divide his state into three zones — a red zone where there have been the most cases of coronavirus, orange with fewer cases, and green where no outbreak has been reported. The federal government may employ a similar plan, officials said.

“In the green zone, small and medium industries will be allowed to start operations, provided the entrepreneur gives us an undertaking to fulfil the guidelines in letter and spirit. We want small industries to start operations at lower capacity first,” Khattar, a close Modi ally, said.

Officials said the number of coronavirus cases in India was 9,152 on Monday, including 308 deaths, a swift rise from fewer than 1,000 two weeks ago.

The government is trying to increase testing for the virus, which causes COVID-19, a respiratory disease, from about 15,000 samples a day to around 40,000.
Riaz Haq said…
"BlackRock says coronavirus has weakened the #investment case for #Indian assets". #India’s #economy was already slowing when the #coronavirus pandemic hit, weakening the case for investors to buy the country’s #stocks and #bonds. #Modi #BJP #Hindutva|twitter&par=sharebar

India’s economy has come under pressure from the coronavirus pandemic at a time when growth was already slowing, said Neeraj Seth, BlackRock’s head of Asian credit.
That has weakened the case for for investors to buy the country’s stocks and bonds, he said.
“India entered the whole situation of Covid on a weaker footing ... and if anything, the lockdown and the slowdown of economy only put more pressure on the banking system,” he added.

The country’s banking sector has long been plagued with troubles such as large amounts of bad debt, which has hurt the economy. Growth in India’s economy — the third largest in Asia — slowed to 4.7% in the quarter ended December 2019. It was the weakest pace in more than six years.

With the country now in lockdown as the government attempts to slow the spread of the coronavirus, Seth said the Indian economy could even contract in the coming quarters.

Official data in India showed total confirmed cases of Covid-19 standing at 10,363 as of Tuesday morning, with 339 deaths. Indian Prime Minister Narendra Modi on Tuesday extended the coronavirus lockdown until May 3. The initial 21-day nationwide restrictions were supposed to have been lifted today.

Slower economic growth means that company earnings will be hurt, and that would hit the prices of stocks and certain bonds, said Seth, adding that BlackRock has been “cautious” on Indian credit at the “lower end” of the ratings spectrum.

But with India’s central bank — the Reserve Bank of India or RBI — expected to cut interest rates further, fixed income investments could benefit, he said.

“So overall, the case for fixed income, probably positive because we do expect the RBI to cut rate and the direction of monetary policy is still towards easing; the case for Indian credit, a little bit more nuanced, a bit more mixed depending on quality ... and also case for equities also remain mixed here,” said Seth.
Riaz Haq said…
#Pakistan included in #G20 & #IMF #DebtRelief plans. The plan will provide immediate deferral of $10-12 billion in debt service due in Fiscal 2020-21, a big boost for Pakistan's #economy facing huge impact of #coronavirus pandemic. #COVID19

Prime Minister Imran Khan on Thursday appreciated the debt relief measures by G20 countries, the International Monetary Fund (IMF) and the World Bank for developing countries, including Pakistan.

The premier lauded the debt relief measures after Finance Advisor Dr Abdul Hafeez Sheikh called him and informed him about the planned approval of an additional $1.4 billion concessionary financing from IMF to deal with the economic impact of coronavirus.

The advisor also updated the premier about the progress on various components of the Economic Stimulus Package announced by the government.

Meanwhile, Foreign Minister Shah Mehmood Qureshi said the decision by G20 countries to give debt relief to developing countries will have "substantial impact” on Pakistan, allowing the country a much needed "fiscal space” to focus on the downtrodden against the backdrop of Covid-19.

He told reporters said the initial debt relief was for one year but added the period could be extended since the situation was still evolving.

Asked to share the benefits for Pakistan, the foreign minister said Pakistan annually spent $10 to $12 billion on debt servicing. He said while the details were being worked out by the finance ministry, the impact of debt relief for Pakistan would be ‘substantial’.

Since the outbreak of Covid-19, Prime Minister Khan has been seeking debt relief for developing and poor countries. On April 12, he formally launched an appeal urging the international financial institutions and developed world seeking debt relief.

Qureshi said prior to the prime minister’s appeal, the foreign office in consultations with the relevant ministries prepared a comprehensive plan for the debt relief.

For this purpose, he said he wrote letters and spoke to 30 foreign ministers over the past few weeks, seeking their help for Prime Minister Imran’s global initiative for debt relief.

The foreign minister said the decision of G-20 was historic and would give major relief to the developing countries.
Qureshi credited the debt relief for developing countries to the prime minister, who was one of the first world leaders calling for such reprieve for developing countries.

To a question, Qureshi urged President Donald Trump to review his decision of suspending funds to the World Health Organisation (WHO). He said this was the time all countries should be united against the fight against coronavirus.

He said the premier’s debt relief initiative has benefited Pakistan as well as the developing world that is grappling to deal with the effects of the pandemic.
Riaz Haq said…
#Pakistan set to request #debt repayment standstill. First large #EmergingMarkets economy to avail of #G20 initiative in response to #coronavirus pandemic. via @financialtimes

Pakistan is set to become the first large developing country to apply for a debt repayment standstill under an initiative of the G20 group of wealthy nations, the country’s finance ministry said on Wednesday.

Islamabad hopes to defer repayments due to bilateral lenders this year of about $1.8bn and use the savings to address the coronavirus crisis, the ministry told the Financial Times.

“The savings will all be Covid-related. The impact of the epidemic in terms of cases and deaths is small compared with the US, Europe and China but the economy has come to a standstill as if the whole country had Covid.”

An emerging market debt portfolio manager at a large asset management company said finance ministry officials discussed the planned request with investors at a conference call on Tuesday.

Pakistan’s central bank expects the economy to contract by 1.5 per cent this year as a result of the crisis, after growing 3.3 per cent in 2019.

Last week, the IMF approved a $1.4bn zero-interest loan to Pakistan to help it address the economic impact of the pandemic. 

Imran Khan, Pakistan’s prime minister, called Donald Trump on Wednesday and thanked the US president for his support for the country at the IMF. 

According to Pakistan’s readout of the call, Mr Khan underlined to Mr Trump that the country had put together an $8bn package to support people and businesses affected by the pandemic. It said Mr Trump promised to send rapid testing machines.

Pakistan has supported US efforts to bring its war in Afghanistan to a close as it seeks to withdraw its troops following a deal brokered between the US and the Taliban earlier this year. The fragile truce will depend on support from Islamabad and Kabul if it is to be successful.

A senior US official told the Financial Times that Mr Trump had helped to secure the G20 debt deferral.

“The administration continues to work with our multilateral partners, including global financial partners like the IMF and World Bank, to help developing nations bounce back from the historic economic challenge of the Covid-19 pandemic,” said the official.

Last week, Steven Mnuchin, US Treasury secretary, defended the administration’s decision not to back a bid to provide IMF liquidity to emerging economies in difficulty, despite appeals to do so from European and African leaders.

The finance ministry said Islamabad would submit a request to the G20 for the repayment freeze as soon as the group published a format for doing so. The initiative, announced last week, is due to run from May 1 until the end of this year, with a possible extension into 2021.

repayment relief from commercial lenders because of the risk that to do so would make it harder to borrow on capital markets in the future. 

The official said Pakistan was due to make repayments of $2.3bn to private creditors during the rest of the financial year ending on June 30, all of which had been covered by refinancing commitments from lenders. He predicted that a further $3.2bn in private repayments due over the following 12 months would also be covered by new borrowing.

repayment relief from commercial lenders because of the risk that to do so would make it harder to borrow on capital markets in the future. 

The official said Pakistan was due to make repayments of $2.3bn to private creditors during the rest of the financial year ending on June 30, all of which had been covered by refinancing commitments from lenders. He predicted that a further $3.2bn in private repayments due over the following 12 months would also be covered by new borrowing.

The G20 stressed that its initiative does not alter the amount owed by debtor countries, which will be allowed to reschedule their repayments over three years, preceded by a one-year grace period. 
Riaz Haq said…
Top International #investment Manager Franklin Templeton winds up $3billion funds, shutting 6 mutual funds in #India after the #coronavirus pandemic creates havoc in the country’s bond markets. #economy

The Indian arm of the US fund group, which manages about $580bn globally, announced that it would halt withdrawals from, and wind up, six funds that invest in lower-rated bonds offering high interest rates. That decision, which affects its Indian clients, was made after investors increased redemptions due to alarm at the spread of Covid-19. Asia’s third largest economy has been largely shut down for almost five weeks as part of efforts to combat the virus’s spread. “This economic disruption and slowdown has created panic among investors,” said Suman Chowdhury, president of Acuite Ratings. “This is a vicious circle . . . It can spill over to a larger number of mutual funds.” Analysts said it could take months or years for investors in the gated funds, which had Rs259bn ($3.4bn) in assets under management as of this week, to get their money back. Winding up the funds “is the only viable option to preserve value for unit holders and to enable an orderly and equitable exit for all investors in these unprecedented circumstances,” Franklin Templeton’s India unit said in a statement. Yet analysts said the move is likely to cause shockwaves in India’s nascent mutual fund industry, noting that if retail and corporate investors pull more money out of debt funds other asset managers may be forced to take similar action. The Association of Mutual Funds in India, an industry group, sought to stop redemptions from other debt funds on Friday. It implored investors “to focus on their investment goals, consult their financial adviser and not get sidetracked by an isolated event in a few schemes of one fund company”.

India’s central bank has taken steps to boost liquidity in credit markets in recent weeks, to limited effect. Analysts said further measures from the Reserve Bank were now likely. Mutual fund investing in India has taken off in recent years as millions of retail customers poured their savings into stocks and bonds for the first time. But that has led to some messy situations for asset managers, which have been hit by the slowdown in India’s economy and piled into riskier investments in their search for yield. That has now come back to haunt them. Fund managers have been burnt by rising corporate defaults, particularly the high-profile failure of a number of lenders over the past 18 months. The near-collapse of Yes Bank last month wiped out more than $1bn in high-risk rupee bonds, which funds managed by Franklin Templeton and others had invested in. “This was a disaster waiting to happen”, said Saurabh Mukherjea, founder of Marcellus Investment Managers, of the Franklin Templeton closures. “They’re the first to bail out. It’s unlikely they’ll be the last.”

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