The economists revealed that worldwide economy is highly integrated by tourism, trade and remittances. According to World Trade Organisation (WTO), world merchandise trade because of COVID-19 is predicted to fall by 13 to 32 percent in 2020. During 2020 trade volume is predicted to decline by double digits in nearly all regions, depending on the duration of the outbreak and effectiveness of policy response. Trade in services is also predicted to be affected adversely because of restriction on transport and travel on account of the pandemic. Because of ongoing trade tensions and slowing economic growth, merchandise trade declined by 0.1 percent during 2019. They have also revealed that because of worldwide economic slowdown, the global oil prices fell at historical low level, created an opportunity for the Pakistan to reduce its import bill and current account deficit along with deceleration in inflation. Furthermore, the economists also said that the outbreak of coronavirus in Europe, North America and GCC may have an adverse impact on Pakistan’s exports as International Financial Institutes (IFIs) have started forecasting a slowdown in global growth during 2020.
According to the provisional statistics released through the Pakistan Bureau of Statistics (PBS), exports from Pakistan during May, 2020 amounted to Rs. 223,536 million (provisional) as compared to Rs. 157,412 million (provisional) in April, 2020 and Rs. 305,303 million during May, 2019 explaining a rise of 42.01 percent over April, 2020 but a decline of 26.78 percent over May, 2019. In terms of US dollars the exports in May, 2020 were $1,396 million (provisional) as against to $957 million (provisional) in April, 2020 explaining an increase of 45.87 percent but declined by 33.40 percent as against to $2,096 million in May 2019. Exports during July-May, 2019-20 totaled Rs. 3,106,723 million (provisional) as compared to Rs. 2,863,885 million during the same period of last year explaining a rise of 8.48 percent. In terms of US dollars the exports during July-May, 2019-20 totaled $19,801 million (provisional) against $21,256 million during the same period of last year explaining a decline of 6.85 percent. The PBS also showed that main commodities of exports during May, 2020 were knitwear (Rs. 28,962 million), bed wear (Rs. 23,380 million), readymade garments (Rs. 21,708 million), rice others (Rs. 20,079 million), cotton cloth (Rs. 15,731 million), basmati rice (Rs. 13,128 million), cotton yarn (Rs. 8,324 million), towels (Rs.6,668 million), madeup articles (excl. towels & bedwear) (Rs.5,537 million) and fish & fish preparation (Rs. 4,554 million).
Under a moderate scenario of contained global impact of COVID-19, the exports may have minimal repercussion on Pakistan economic growth in FY2020 as exports form a relatively smaller portion of the GDP in Pakistan as against to emerging economies. It is also said that Pakistan’s external sector remained under pressure for a long time. Exports were on a downward trajectory, while imports grew significantly. Statistics showed that during July-March FY2020, current account deficit reduced by 73.1 percent to US$ 2.8 billion (1.1 percent of GDP) against US$ 10.3 billion previous year chiefly because of reduction in trade deficit by 31.0 percent to US$ 14.7 billion. However, the COVID-19 outbreak generated both demand and supply shocks reverberating in the world economy and it became an unprecedented challenge having severe impact on social and business activity. No doubt, the world went into a lockdown which is leading to economic recession. To contain the spread of coronavirus, quarantines and social distancing have been adopted which affects various sectors like travel, hospitality, entertainment and tourism. Supply chain is dislocated because of closure of workplace. The domestic disruption has spillover effect on trading partners by trade and worldwide value chain linkages, apart from that historically low global oil prices and declining commodity prices adding to overall macroeconomic effects.
World Economic Outlook April 2020, has forecasted that the global economy to fall sharply by 3 percent because of COVID-19; worse than 2008-09 financial crisis. With the anticipation of fading pandemic in the second half of 2020 because of normalized economic activity, the global economy is predicted to increase by 5.8 percent in 2021. However, with prevailing global situation, there is risk of worsening of economic outlook.
PBS also showed that the imports into Pakistan during May, 2020 amounted to Rs. 458,272 million (provisional) as against Rs. 526,880 million (provisional) in April, 2020 and Rs. 730,962 million during May 2019 explaining a decline of 13.02 percent over April, 2020 and of 37.31 percent over May 2019. In terms of US dollars the imports in May, 2020 were $2,863 million (provisional) as against to $3,204 million (provisional) in April, 2020 explaining a decline of 10.64 percent and by 42.93 percent as against to $5,017 million in May 2019. Imports during July-May, 2019-20 totaled Rs. 6,421,012 million (provisional) as compared to Rs. 6,767,523 million during the same period of previous year explaining a decline of 5.12 percent. Statistics also showed that in terms of US dollars the imports during July-May, 2019-20 totaled $40,866 million (provisional) as compared to $50,410 million during the same period of previous year explaining a decline of 18.93 percent. Main commodities of imports during May, 2020 were electrical machinery and apparatus (Rs. 31,412 million), iron and steel (Rs. 23,205 million), palm oil (Rs. 21,591 million), petroleum products (Rs. 20,813 million), power generating machinery (Rs.20,339 million), iron and steel scrap (Rs. 19,435 million) plastic materials (Rs. 18,991 million), mobile phones (Rs.17,778 million), natural gas, liquefied (Rs. 17,285 million) and raw cotton (Rs. 16,535 million).