The global pandemic has left everyone severely affected. It not only affected the people physically and mentally but also left the global economy crippled and weak. It is safe to say that the global economy has been affected at an alarming rate. Developing countries, such as Pakistan, have been a victim of Covid-19 as well.
In this concise yet informative blog, we will shed light on the impact of Covid-19 on Pakistan’s economy.
The negative impact of Covid-19 on Pakistan’s economy:
Covid-19 spread like fire, and today, it has changed the dynamics of the world. Due to this global pandemic, the mode of doing business has changed tremendously. Some of the negative impacts Covid-19 has enterprises include:
Due to the ongoing global pandemic, the human capital got affected tremendously. Many people lost their lives to the outbreak, leaving their families stranded and without any financial backing.
Similarly, due to the pandemic, many businesses incurred losses. As a result, they laid off a considerable number of employees. Hundreds and thousands of people lost their jobs to the pandemic.
Also, there is a considerable percentage of people who did not receive their full pays, and then there are those who received only a fraction of their original income due to the financial crisis faced by the companies.
Also, many offices in the corporate sector faced employee absenteeism caused by the pandemic itself. Many people took sick leave leaving the organization with fewer helping hands.
According to Investopedia, throughput is the amount of a product or service that a company can produce and deliver to a client within a specified period.
Due to Covid-19, the demand for many products and services was reduced. As a result, the companies had to cut down their production capacities. This power reduction led to idle warehouses and machinery, adding additional costs to the company.
For instance, one of the sectors that got affected due to covid is the airline industry. Due to travel restrictions, the planes were left idle, acting as a massive liability to the airline industry.
Due to the outbreak, most of the countries put travel restrictions and bans on the people. This restriction affected not only the people but also well-established businesses. Many people were stuck in foreign countries due to the travel ban. Similarly, the logistics and delivery chains also got affected to a large extent.
For example, the fresh produce exporters from Pakistan had to incur huge losses. For instance, the people who were into the mango and tomato export business had to bear losses because they could not send their produce to their foreign clients.
Reduction in sales:
It was commonly observed that many products and services were reduced due to the ongoing pandemic in Pakistan. For example, the tourism agencies operating in Pakistan had to shut down their business due to no sales. Similarly, the dining business was also a victim because many people had to close their shops as their expenses got higher than their profits and selling prices.
Overall financial crunch:
A financial crunch is created by a situation in which the price of investment rapidly drops below its support level. Due to covid-19, many industries faced a financial crunch. The trade market suffered because of the price drop in many shares and stocks.
The bright side:
Corona’s pandemic in Pakistan came with many challenges and limitations. During the pandemic, people came closer, nations identified their weaknesses, and came out of the pandemic with flying colors. However, the pandemic also acted as an event where we learned things we did not know we needed to survive in this competitive and uncertain world.
The global pandemic opened new avenues for the people. A lot of markets and industries boomed during the pandemic and made huge profits. For example, during the pandemic, demand for many commodities and products increased by leaps and bounds. Initially, companies did not have capacities to meet the increasing demand. To cater to the growing demand trend, the companies started investing to increase their current capacities.
For example, the market for face masks, soaps, and sanitizers boomed due to the pandemic. As a result, companies who were not even in the same niche invested and started producing these products in bulk.
Reframe old methods:
Many traditional businesses had to reshape and reform due to the pandemic. Many companies and markets had to alter their traditional modes of doing business to stay in the market during the global pandemic.
For example, many businesses such as apparel and food chains had to sell their stuff entirely on the internet. People were not leaving their houses, so the companies had to reach the customers.
The whole logistic chain got disrupted, and the traditional ways of doing business revamped at a very high pace. This newer system is more efficient and convenient. Now, companies do not have to spend tons of money on warehouses and retail. They can create an online presence and a good delivery service, and they are good to go.
New business models:
Many businesses flourished during the pandemic. Also, many companies innovated and changed the dynamics of doing business. The information technology sector, digital marketing, virtual coaching, and logistic companies revamped significantly during the pandemic.
Prospects and recommendations:
Many economic issues of Pakistan surfaced during the pandemic. The economic problems of Pakistan must be addressed and radical steps should be taken to eradicate these problems from the country.
To excel and be successful in the global economy, Pakistani investors and business people require the government’s support. The government should give tax relaxation and subsidies to the people who want to start new businesses and to the people who want to secure their businesses.
Also, the government should make policies and guidelines that ensure and safeguard the physical and mental health of human capital.
The Pakistani economy has all the potential, skill set, and abilities to contribute significantly to the global economy. For example, Pakistan has an abundance of agricultural land. We produce a lot of fresh produce every season. However, because of the pandemic, a lot of export material produced got spoiled and rotten. In short, Pakistani producers suffered a lot due to travel and trade restrictions during the covid. To address this issue, government officials should take steps to ensure seamless trade channels with different countries.
The current situation of Pakistan’s economy got affected by the pandemic. The current situation of Pakistan is getting better but we need continuous improvements to stabilize our economy.
This global pandemic highlighted the importance of research and planning. Only those businesses survived during the pandemic who were agile and molded themselves with the environment. For example, food chains that shifted to online mediums stayed.
Due to travel restrictions, the trade channels were disrupted. Many international brands became scarce. However, during this time, a lot of local producers came into the picture. For example, many companies started producing face masks and other medical instruments locally.
So, these are some of the significant factors that affected the Pakistani economy. The impact of covid 19 on Pakistan’s economy was significant but we came out of it as a resilient nation.
Covid-19 gave a very challenging time to human beings across the globe, but it also prepared us for the future and helped us explore untapped market segments. The current financial condition of Pakistan is getting better. We identified our mistakes and worked on our strengths. With continuous efforts, the economic condition of Pakistan will get better.
We hope this blog proved to be helpful for you and may aid in reshaping your future investment decisions.
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