Torrential Monsoon rains and flash floods have wreaked havoc across Pakistan. So far around 1100 people have died while thousand others have injured. Thousands of houses and other constructions have washed away in flash floods. A vast agriculture land has also inundated and the crops on it were destroyed.
While preliminary estimates have put damages caused by floods at a whopping $5.5 billion, the impact could be far-reaching and across the board. According to economic experts besides the current losses the country economy will also face following long-term negative impacts:
Food inflation
Floods in Balochistan, South Punjab, and Khyber Pakhtunkhwa have not only destroyed crops but also disrupted the supply chain. The immediate effect was seen in urban centers where vegetable and fruit prices went up manifold.
Next, you may encounter rising milk and meat prices. Dairy farmers have already been complaining about fodder supply constraints and rising prices of animal feed. It won’t take them long to increase milk prices.
Unemployment
Economic experts believe that floods will leave a large number of people unemployed especially those working in the agriculture sector or small industries or running small private businesses.
With an economic slowdown, overall unemployment may increase.
Banking, industry, tourism sectors
Since inflation and low demand will likely slow down economic activity, the demand for bank loans may drop. Meanwhile, banks may face a higher number of non-performing loans.
The tourism sector has taken a stronger hit. Heavy rainfall and flash floods destroyed hotels and other infrastructure in Swat, Chitral, Dir, and other tourist destinations. The recovery may take quite some time — at least months.
Current Account Deficit
Cotton Brokers Forum Chairman Naseem Usman says after the massive destruction of cotton crops, the price of cotton has shot up to a historic high of Rs23,00 per maund. The shortage of cotton will affect textile production and the country will be forced to import cotton, said Usman.
Pakistan’s rice exports will also suffer after the crop destruction.
Experts believe with higher food and cotton imports and lower textile and rice exports, the current account deficit will increase for the remainder of the current fiscal year.
