Global economies have undergone a turbulent year since lockdowns started in March last year. Pakistan’s economy observed a nosedive witnessing a contraction of 1.5% during the year 2020.
A study by the Lahore School of Economics called ‘Growth, Jobs, Welfare and Macro Policy in Pakistan’ has evaluated the impact of COVID-19 on economic activity. The impact evaluation was carried out by measuring economic activity during the four quarters of 2020 and a comparison of results to the IMF’s project of 0.5% growth.
Findings of the study reveal that the economic downturn has caused the country a loss of 715,000 jobs and pushed 2.5 million people into abject poverty. Since Pakistan is already struggling to get its majority population living under poverty, this economic contraction acts as a blow to other efforts.
Although government intervention to counter the harsh economic effects of the pandemic has produced mixed results, the authors of the study suggest interest rate reduction as a step towards recovery. Pakistan can take concrete steps to reduce its economic burden without hampering the country’s GDP growth.
Leave a Reply