The State Bank of Pakistan (SBP) has released a report on the impact of Coronavirus pandemic on the economy.
According to the SBP, the coronavirus has affected trade, remittances and investment, while the global economy has also suffered. The report said lower oil prices benefited importing countries.
SBP stated that the Coronavirus has affected business activities at the local level, reduced the purchasing power of the people and reduced foreign investment.
The SBP report said that bankruptcy of companies would affect the income of banks and closure of businesses would also increase unemployment, while in the current situation, foreign exchange reserves may decline.
According to the report, while expressing concern over the devaluation of the rupee, the SBP said that if the situation remained the same, there was a risk of devaluation of the rupee, economic growth rate and budget would be affected.
SBP report further stated that Pakistan’s economy had started to recover before the Coronavirus pandemic. The government took several steps to improve the economy, which led to a decline in imports and an increase in exports.
The report said that rating agencies kept Pakistan’s rating stable as revenues began to rise in the early Fiscal Year 2020, business confidence increased and foreign investment began to grow faster.
The central bank report on health said that government spending on the health sector is lower than other countries in the region. In the current situation, public awareness is very important. Lockdown will be a challenge to provide food and social security.
SBP said Pakistan’s debt is increasing, Pakistan’s economy is based on consumption and the declining purchasing power of the people will affect GDP.
It may be recalled that the country was locked down to curb the spread of Coronavirus, which has been relaxed since May 9.
Due to the pandemic, the SBP had also reduced interest rates and now the interest rate has come down to 8%.