THE World Bank has just released its first major report looking in detail at the economic projections for the South Asian region as the Covid-19 fight continues, and the findings are severe. In uncharacteristically blunt language, the report declares at the outset that the economic scenario staring the entire region in the face is “dire”. The impact on poverty could be “catastrophic” and the region will see “the worst economic performance of the last 40 years”. The bank has brought the regional growth forecast down to a range between 1.8pc and 2.8pc for the year 2020, where its earlier forecast was 6.3pc only six months ago. This is a near catastrophic downgrade, and for Pakistan the projection for the ongoing fiscal year could be as dismal as negative 2.2pc, meaning the economy would actually have shrunk instead of having grown.
But this is not even the top item to focus on, though it certainly captures the depth of the economic recession facing the country now. The largest item to focus on is the impact on the poor. The latter are more likely to become infected, the report notes, because they live in cramped quarters and have diminished access to healthcare as well as basic hygiene products such as soap. They are also more likely to lose their jobs, and are more affected by food price spikes, which could well be an unintended outcome of the lockdowns if due attention is not given to keeping the food supply chain moving. The bank rightly points to the grave vulnerabilities of South Asian countries, and the poorer segments in particular, when it comes to tackling the virus.
As the authorities in Pakistan — federal and provincial — grapple with the politics and ground realities of the lockdowns, at some point it will become necessary to also start looking at ways to jumpstart the economy. The report points this out as a clear area of focus, even though its projections show that the economy will be largely moribund all through 2021 as well. That will be the moment when the play of vested interests is sure to kick in with maximum force. Already we can see powerful elements from manufacturing and services increasingly using their considerable clout to find ways to either loosen the lockdown or lift it altogether. When the time comes to jumpstart the economy, this same game will be magnified, and all sorts of schemes will be advanced in the name of reviving growth, but whose main purpose will be to channel the flow of public resources into private hands. Putting vested interests aside during the days of the lockdowns while the fight against the Covid-19 virus is waged is critical to ensuring that whatever growth emerges at the other end of this tunnel is equitable and sustainable.
Published in Dawn, April 14th, 2020