KARACHI: Ateeq-ur-Rehman, an analyst of the economy, has said that he wonders if the country's economic growth turned negative due to Covid-19's first spell, what is going to happen in the second spell, which is regarded to prove more devastating than the earlier one?
The central bank stated in its annual report on the state of Pakistan's economy in fiscal year 2019-20 that the main reason for the negative economic growth was the coronavirus pandemic and its disastrous effects on business activities.
The State Bank of Pakistan (SBP) estimated that Pakistan's real GDP has contracted by 0.4 percent in the fiscal year 2019-20. He added that for a fact, the main reason for Pakistan's GDP loss of $50.5 billion is due to uneven and continued trade deficit and balance of payment crisis.
"Our GDP fell from 5.8% to minus 0.04% and the trade deficit increased by 2.02% despite a growth in exports.
"It is such a misfortune that Pakistan being an agricultural country is importing produce like cotton, wheat, sugar, tomatoes, potatoes, etc worth USD 6 to 7 billion thus bringing an additional burden to Pakistani imports," he said.
He said that the most horrifying character of a negative GDP is the increase in unemployment. Ateeq said that the factors responsible for the declining GDP were the state's reliance on borrowings from external and domestic sources.
The external debts of Pakistan stand at $113.8 billion while the domestic debts at Rs322.9 billion. Another reason for declining GDP was the towering cost of production due to huge cost of electricity and gas.
Copyright Business Recorder, 2020