Impact on the Global Economy-COVID 19

During March 2020, the World Health Organization (WHO) declared the Coronavirus (COVID-19) outbreak as a pandemic in recognition of its rapid spread across the globe. Governments all over the world took steps to contain the spread of the virus and implemented closure of borders, released social distancing guidelines and enforced country wide lockdowns and curfews. According to a dashboard released by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU, USA), over 4.8 million cases have been confirmed and more than 300,000 people have perished. Due to the safety measures adopted by governments, as mentioned above, lives and livelihoods of most of the global population is at risk, thereby triggering an economic crisis with dire societal consequences. On the macroeconomic front, performance has already started to deteriorate and is expected not to stabilize till the end of the financial year. A recession is imminent and International Monetary Fund (IMF) has already revised growth forecast and GDPs of advanced and developing countries, while Asian Development Bank (ADB) has estimated that the pandemic could cost the global economy between $5.8 trillion to $8.8 trillion. Impact on Asian Economies and Economic Outlook In this section, the impacts and economic outlook of China, Pakistan and India will be assessed. Although China is several weeks ahead of many other countries on the “curve” of the virus progression, but it has already witnessed 36% decline in GDP in the first quarter of 2020. As per the data compiled by IMF, it is observed that manufacturing and services activities have declined dramatically while services appear to be much harder hit than manufacturing. In Pakistan, the main challenge for the government was to steer a judicious path between the need to insulate the population, and to revive the economic engine. The country was already in a mild recession pre-COVID, and the extended lockdown has surely made the situation worse. The lockdown imposed by Federal and Provincial governments jammed the economic wheel and resulted in the fast-track contraction of the economy. Although the pace of economic contraction is less than -1.5% which IMF initially predicted, it resulted in a slip in the economic size from $280 million to $265 million.