The Covid-19 crisis is unique in several respects. This devastating recession does not have an economic origin, will dance largely to the tune of non-economic factors, and is truly global. The policy response has been equally unique, in terms of speed, size and scope, eliciting an unprecedented concerted effort combining monetary, fiscal and prudential policies. All this raises difficult near and longer-term challenges. Rebuilding policy buffers in all policy areas is likely to be the policy challenge of the decade ahead, the current pandemic threatens the world economy not only as a health crisis but as a severe social, economic and political crisis and any pandemic that takes a time longer than a year means business failures, vast unemployment, inflation and hunger which leads towards the global recession but at present the bigger challenge for the growing nations like Pakistan is to keep their economic wheel moving that definitely ensures the provision of basic food to their population. With calls for social distancing, services sector employments that rely upon client supplier collaborations or include the gathering of larger number of individuals are probably going to endure an enormous shot of the pandemic. Laborers in ventures, for example, eateries, lodgings, kid care administrations, retail trade , transportation, the travel and tourism and education are at a higher danger of losing their positions.
Pakistan is expecting to face a negative GDP of 1.5% this year with unemployment of 18 million people or above along with the poverty touching 65% reflecting huge amount of population under the vicious circle of poverty so, this is the time to find out ways and means necessary for survival. The service sector of Pakistan contributes more than 60 percent in GDP and provides employment to about 1/3 of Pakistan’s labor force. It is estimated that Pakistan may face an economic loss of around Rs.1.3 trillion because of a reduction in the services sector as compared to the targeted growth rate of 4.8% for the fiscal year 2020. The current lockdown due to pandemic has severely affected the sector including transport, healthcare, insurance, aviation, tourism, traveling, hoteling, recreation, and banking sectors in particular. If we analyze each component of the this sector separately than we find that, tourism industry is facing deep disruptions due to the outbreak of this pandemic. According to a report, global international tourist arrivals are expected to decline by 20% to 30%, which will translate into a loss of US$ 30 to 50 billion. Pakistan’s tourism, travel and transport sectors are also affected badly as public transportation services including flights, domestic markets, public places, restaurants and hotels all are closed that initiate a new economic crisis especially for poor, daily wagers and for low paid workers. In big cities various hotels are transformed into quarantine centers. Due to coronavirus pandemic, thousands of international tourists cancelled their reservations and bookings that creates adverse impacts on tourism community even porters, travel guides, street vendors and all those who depends on tourist spending are suffering and affecting. Hospitality industry also face significant losses due to the cancellation of travel booking and drop in the number of travelers which intern converted into closure later. The industry witnessed the loss of Rs. one hundred million only in February 2020 due to decline visits of foreign tourists. Education sector is one of the sector highly affected the Covid-19 across the world. Internationally, Cambridge has canceled all the examinations of O & A-Level. As of April 23, 2020, 1.6 billion learners are affected due to the closures of educational institutes in 191 countries. All the schools and colleges have been closed in Pakistan to avoid spread of disease to the students. But every problem is accompanied by opportunities so Pakistan with one of the lowest standing of 131 out of 140 in ICT adoption(2018) is now ready to accept the technology in their lives because acceptance is the major hurdle in adoption. In Pakistan, the number of affected learners or students stands at 46,803,407 reported figure. In a further breakdown of the number of student affected at pre-primary level are 8,636,383, at secondary of 13,357,618 and at tertiary level of about 1,878,101. Pakistan already has a high number of children who are out of schools. With frequent school closures, lack of infrastructure and poverty; Pakistan’s education system stands at a critical point. While it ensures access to education and bringing back the out of school children, Pakistan needs to strategize and modernize its education policy urgently. While the COVID-19 is a testing time for Pakistan, it can learn from the challenges that are emerging to prepare for a better future. Transportation sector due to lockdown in the country and the suspension of intercity transportation of all modes, like railways, roads, and air transportation, this sector faces huge losses and make larger numbers of workers unemployed like drivers of rickshaws, coaches, truck, buses, street vendors, coolies, Careem, Uber, Bykea and other pick and drop services, etc. Goods transportation activities have declined by 80% as hoteling and workshop facilities on highways remain suspended amid the lockdown. Transporters and retailers complain of various issues arising out of the health crisis, from lack of basic facilities on highways to rising transportation prices, as well as a labour shortage.
Aviation industry according to estimates of PIA, the aviation industry of Pakistan has faced losses of US$15 million in February 2020 due to the suspension of domestic flights and US$ 7.6 million due to the suspension of international flights. In addition to these losses, around Rs. 4 billion has also been spent to bring the stranded Pakistani back to Pakistan. The industry, therefore, requires a robust relief package to overcome the losses.
Coronavirus has made disturbance in regular daily life and routine of all people including insurance policyholders; subsequently, it was felt significant that the insurance policyholders are given most extreme help and assistance in every operational perspective identified with insurance policies in testing times. However, the Securities and Exchange Commission of Pakistan (SECP) has given a lot of rules and guidelines to the insurance agencies to encourage policyholders to the larger extent. SECP further accentuated organizations to utilize electronic modes for disbursement of claims.
The outbreak of banking sector
In pre-Covid-19 situation the increasing financing costs(rate of interest) were a fortune for Pakistani banks by an aggregate of 325 premise focuses to 13.25%. This at that point stayed unaltered right until the cut on March 17, 2020. In its help bundle in the form of relief package for borrowers reported on March 26, SBP additionally loosened up the regulatory criteria for restructuring of advances until March 31, 2021. Advances that are rescheduled within 180 days from the due date of payment won’t be treated as defaults. This will help give some an ideal time and opportunity to banks to fix non-performing loans issues in the short run, subsequently assisting with spreads. Similarly, SBP also decreased the capital conservation buffer from the current 2.5% to 1.5%. On the whole, this will permit banks to loan an extra amount of around Rs800 billion, a sum equal to about 10% of their present outstanding credits and loans. Since Pakistan is confronting genuine misfortunes because of interruptions in economic activities locally and globally because of Covid-19, State Bank of Pakistan has given few relaxations to scheduled banks in terms of regulations and specific relief measures.
Telecom sector where each industry is enduring because of lockdown, the telecom business in Pakistan is striving to satisfy the rising need of the internet simultaneously. Since the lockdown has been enforced, there has been a 15% rise in internet use in Pakistan. Given the current situation, the telecom area outfitted its endeavors to give alleviation and relief to the consumers. Every mobile operator have announced subsidized voice and data bundles and mobile payments. Use of internet and telecom services have ballooned across homes for individuals to assist their activities of work from home or socialization. The government is also working hard along with telecom organizations to help quicken the extension of expansion of technical and bandwidth capacities and plugging Gilgit-Baltistan and Azad Jammu and Kashmir, the main two regions without 3G/4G in Pakistan, into the national digital mainstream. Telecom organizations and social media giants like Facebook have ventured up specialized help to handle the growing digitization of work and social lives.
Health sector is the hardest hit of COVID-19 and creating nations like Pakistan are battling hard to furnish better facilitate with their inefficient and ineffective health system and confronting the infection with their lives to safeguard the entire population and attempt to create tele health facilities. The Covid-19 coursed by SARS-CoV-2 in the Wuhan city of China which rapidly spread in 208 countries/regions including USA, UK, Italy, Spain and Pakistan. The current situation of Pakistan isn’t satisfactory as Pakistan is one of the highly populated nation where required more facilitation. Pakistan is a growing nation where the monetary and financial position isn’t better when contrasted with China, USA, UK, Russia to battle with the spread of Covid-19. The quantity of medical clinics and isolation or quarantine are not satisfactory as per need of the time. If the facilities are improved, at that point it won’t be hard to control the transmission of infections and treatment of patients. At present the testing facilities are much lower than the necessary required target. The testing facilities could increase by five to ten folds. Targeted steps must be taken to control the current situation like staying and working from homes, lockdown, social distancing and utilizing sanitizers and face mask when necessary.
It is concluded that these crisis have enforced and compelled the businesses to go online within days and weeks, organizations, which were in the past been glad to offer basic web arrangements & solutions and at the most a mobile phone Apps, has been scrambling to giving modern intelligent solutions and facilities from online courses, webinars, master classes by industry specialists, culinary short courses, to local tour guide skill development programs, to umpteen hospital management programs. Likewise, numerous Museums and destinations have increased their innovation game, offering virtual visits and endeavor and will be the open door for youngsters who are looking for more diverse and futuristic careers. A perfect clean environment will be the minimum expected standard, regardless of whether that be airlines, cruise ships, coaches, eateries, or hotels. This will be the new minimum global norm. Everyone in the hospitality industry should participate and up their game. There will be no compromise to the standard, as this will be an integral part of the expanded demand level and interest by the visitors and guests. These sectors must incorporate individual grooming of their staff, disinfection hygiene, and sanitization of all products, services, and venues.
Standards companies will have to devise ratings and monitoring around this measure. There will be a lot of background change of ownerships of hotel brands. Still, operational things will become much more efficient with hygiene and technology standards being applied even more diligently. The segment will sustain and survive. Concerning Pakistan, tourism has become one of the most productive sector of the economy and grabbed the attention of the government due to its real potential will contributes around 3% in the GDP. The disturbance of the tourism industry will not only affect the traveling but also affect the transport, restaurants, handicrafts, and hotel industry. Covid-19 has redefined the way people engage and interact in their daily lives. Rules such as social distancing have started to define how people behave. Playing it safe and staying home may make more sense for those who have their wellbeing and health as the top priority. This could spur the desire for healthy dining, well-being options under the appearance of health tourism.
Generally, June-August is the peak season of the hoteling industry as most of the people travel in these months to the northern areas of Pakistan. Given the present situation, it is expected that the hospitality industry will face a severe decline in revenue generation due to the pandemic and suspended flight operations. However, the infrastructure of transportation, i.e., buses, can be used as mobile grocery shops, and services like Careem, Uber, and Bykea, can be utilized for doorstep products and food deliveries. Companies who will move forward and develop out of the box solutions will survive. To overcome the learning, loss of students, the Government of Pakistan has taken the initiative of launching Tele-Schools TV Channel. Tele school offers programs from pre-primary classes till class 12. This initiative aims to provide education to all the students during and after lockdown. Furthermore, private schools and universities are also offering online courses to students. However, shifting from a classroom environment to online classes is quite challenging for students, teachers, and administration due to weaker IT infrastructure.
Digital banking technology will also be utilized to disburse these funds in a hassle-free and safe manner to the deserving people. However, During the Covid-19 crisis, telecom operators have faced significant challenges, including traffic growth, congestion, network continuity, and security issues. Considering the present situation, the government should also enhance the spectrum and provide relief measures to this industry as well. Considering the significance of the telecom sector, the government has declared mobile communications and internet services as essential services. Easypaisa partnered with Punjab’s Zakat and Ushr Department to disburse Rs1.5 billion to more than 170,000 beneficiaries in the provinces.
It is recommended that, we need to form a Pandemic Control Authority comprising government, health experts, scientists, businessmen, intellectuals, and management experts to quickly evolve a national policy to swiftly transform our health system, laws, businesses, social behaviors for during and post coronavirus situation. We should be proactive rather than reactive. Pakistan needs more screening facilities for the arrivals as well as for the departures. Pakistan must modernize the means of education and the access to technology, including the Internet, in the most far off places of the country. Pakistan must look at how the African countries like Sierra Leone during the time of Ebola, where lessons were broadcasted over radio and television. This required lesser dependency on the Internet and computers while making use of the existing means of communication.
State Bank has also issued an advisory that clearly emphasized the provision of smooth financial services to the general public and people in the business. Moreover, due to declining interest rates, the deposit of commercial banks also declined which affects their profitability. Specific measures for improving the policy servicing to insurance policyholders in current scenarios which lead towards the creation of healthy relationships between insurers and insurance policyholders is required. The areas which lacks Internet facilities public private partnerships (Telco’s) hotspot system must be installed like India to facilitate distance learning system and government just formulate and ensures policy implementation and allow market forces to run themselves. While the jury is still out on the quality and adequacy of Pakistan’s response to Covid-19, the national digital landscape is growing by leaps and its positive early impact is expanding rapidly. The full rewards of this phenomenon will be apparent only when a comprehensive E-Governance System and E-Government has to be employed at all the tiers. Instead of attracting foreign tourism government first try to ignite domestic tourism along with SOPs to follow as we all know that due to Covid-19 airlines activities are banned by most of the countries and after covering all travel regularities and risk premiums cost of international tourism will also rise so external tourism are badly affected by this so, Internal engine must be boost to exploit domestic tourism and easy for countries like Pakistan to jump start after the ease of lockdown. We may also benefit from the relations of USA, Germany and many other countries with China. Now Chinese will search for new destinations like Malaysia and Pakistan but advance measures needed to prepare ourselves to take advantage from exploitation of tourism industry.
Hence, a strong and better economic recovery from the Covid-19 pandemic requires governments to make the services sector a key element in their policy mix as services play a key role in increasing productivity, efficiency and effectiveness in the whole economy. Globally, services represent two-thirds of economic output, more than half of the world’s jobs and about a quarter of direct exports.
But direct exports of services are just the tip of the iceberg. Services provide significant inputs to all economic sectors with their indirect contributions, including those produced in-house by non-services firms, services can account for almost two-thirds of the value-added of total exports.
Further, services make up two-thirds of total productivity growth in developing countries, making them a key element of these countries’ strategies for industrialization that’s why it is highly recommended that experts and policymakers to focus on services as it will help countries like Pakistan to recover better from the Covid-19 crisis, and keep them on track towards the UN Sustainable Development Goals (SDGs).