Coronavirus: SBP warns extensive prevention steps to grimly impact economy

KARACHI: The State Bank of Pakistan (SBP) has warned that the extensive prevention steps against the coronavirus pandemic would grimly impact the economy of the country.

In a report, SBP said, “In the baseline case, the impact of the pandemic to the economies could be likened to any other calamities that befall us, a sudden disruption followed by a wave of reconstruction and recovery and ultimately the return to normalcy.”

The SBP in the report on the overall effect of the COVID-19 pandemic noted that the epidemic had limited the scope of the country’s economic activity with shopping malls, restaurants, and other public places partially or entirely closed.

In the report, the SBP said that transporters, manufacturers, and retailers can all be expected to reposition themselves and make all-out efforts to compensate for the earlier losses. “However, domestic demand may remain suppressed, as higher unemployment and weak consumer confidence would weigh in.”

Ambiguity would remain in the country until the lockdown was completely lifted, the report stated; however, under normal situation, the effects of natural calamities can be dealt and economies return to normal after renewal and rehabilitation.

The SBP was, however, optimistic that growth can be boosted by adopting economic recovery policies, but increasing the spread of COVID-19 will raise public health spending, the SBP highlighted.

The central bank further said that more funds will be spent on healthcare and vulnerable households, whereas economic policies will be fixated on businesses’ survival than growth.