ANL 32.50 Decreased By ▼ -0.30 (-0.91%)
ASC 14.38 Decreased By ▼ -0.22 (-1.51%)
ASL 22.65 Decreased By ▼ -0.24 (-1.05%)
AVN 86.95 Decreased By ▼ -0.93 (-1.06%)
BOP 7.92 Decreased By ▼ -0.05 (-0.63%)
BYCO 9.94 Decreased By ▼ -0.02 (-0.2%)
DGKC 116.00 Decreased By ▼ -0.20 (-0.17%)
EPCL 52.50 Decreased By ▼ -1.00 (-1.87%)
FCCL 23.25 Decreased By ▼ -0.43 (-1.82%)
FFBL 26.65 Decreased By ▼ -0.90 (-3.27%)
FFL 15.20 Decreased By ▼ -0.10 (-0.65%)
HASCOL 9.15 Decreased By ▼ -0.10 (-1.08%)
HUBC 75.50 Decreased By ▼ -1.00 (-1.31%)
HUMNL 6.15 Decreased By ▼ -0.04 (-0.65%)
JSCL 20.15 Decreased By ▼ -0.36 (-1.76%)
KAPCO 38.10 Decreased By ▼ -0.60 (-1.55%)
KEL 3.70 Decreased By ▼ -0.06 (-1.6%)
LOTCHEM 15.00 Decreased By ▼ -0.50 (-3.23%)
MLCF 42.99 Decreased By ▼ -0.76 (-1.74%)
PAEL 32.57 Decreased By ▼ -0.13 (-0.4%)
PIBTL 10.00 Increased By ▲ 0.05 (0.5%)
POWER 8.79 Increased By ▲ 0.14 (1.62%)
PPL 82.30 Decreased By ▼ -1.00 (-1.2%)
PRL 24.10 Increased By ▲ 0.05 (0.21%)
PTC 9.11 Decreased By ▼ -0.04 (-0.44%)
SILK 1.33 Decreased By ▼ -0.03 (-2.21%)
SNGP 39.10 Decreased By ▼ -0.25 (-0.64%)
TRG 176.00 Increased By ▲ 5.00 (2.92%)
UNITY 30.75 Decreased By ▼ -0.50 (-1.6%)
WTL 1.55 Increased By ▲ 0.03 (1.97%)
BR100 4,795 Decreased By ▼ -29.74 (-0.62%)
BR30 24,960 Decreased By ▼ -99.54 (-0.4%)
KSE100 44,707 Decreased By ▼ -222.85 (-0.5%)
KSE30 18,276 Decreased By ▼ -98.7 (-0.54%)

Coronavirus
VERY HIGH
Pakistan Deaths
16,842
14424hr
Pakistan Cases
784,108
587024hr
Sindh
275,815
Punjab
282,469
Balochistan
21,365
Islamabad
72,150
KPK
110,875

The rising number of infected cases and death toll is resounding alarm bells for the global economy. Almost all sectors ranging from aviation tourism, hospitality, to retail, and manufacturing are grappling with the impact of COVID-19 pandemic. The fears of a global recession to follow the outbreak are even more frightening.

The economic destruction of the coronavirus pandemic is starting to be felt at home too. Amid the near-halt economic activity, layoffs are inevitable. A recent sectoral analysis of the impact of social distancing on various sectors in the latest PIDE Bulletin shows that layoffs in the wholesale and retail sector are likely to touch 4.55 million in the ongoing partial lockdown scenario.

The gravity of this number is highlighted by the fact that it represents 70 percent of the total vulnerable employment in the sector (6.5 billion) and 37 percent of the total expected layoffs (12.32 million) in the ongoing partial lockdown. Not only are the retail sector expected layoffs highest among all sectors, it is the second largest sector in terms of employment after agriculture and thus has one of the highest proportion of vulnerable employment in the country. The situation could get worse in case the government resorts to complete lockdown – the sector layoffs as per the study could go up as high as 90 percent!

However, unlike the exporting businesses, construction sector, and others that have been part of the government’s relief package, the retail sector has received little attention. The sector’s growth momentum has been broken during the last two years due to the economic slowdown amid currency devaluation, interest rate hike, and industry experts highlight that the sector is already reeling from the increase in GST from 6 percent to 14-17 percent in the last budget that has severely hit the bottomline and cash flows, leaving no room to maneuver in the current crisis situation.

While the retailers have sought support from the government to survive, what is important here is the fact that the country’s GDP is largely driven by domestic consumption rather than exports, and the retail sector is a key component of the domestic demand.  The retail sector contributes over 30 percent to the services sector and provides more than 16 percent employment in the country.

Moreover, the ecosystem of retail is much more than the shops; the sector highly depends on domestic manufacturing and as the study points out, reduction in demand due to the closure of outlets under lockdown would mean significant slide in domestic manufacturing. The effects are devastating as the sector has over 50 allied sectors and many SMEs that would also feel the heat from the layoffs.

The fear of a domino effect is colossal, but that’s true for many other sectors as well. The two key concerns of the retail sector are the rents they pay and the working capital needs. What the government can do in this situation is provide incentives like cash flow loans, lowering sales tax, deferring penalties and rents, abolishing minimum tax temporarily – like the rest of the world - in return for business registration, integration and digitalization – something that would go a long way once this menace is over.