Contraction in Pakistan’s Economy

 
 
 
Posted by: IIPS Category: Data Visualisation Comments: 0

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.

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IMARAT Institute of Policy Studies

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