Economic Impacts of COVID-19 Through Trade Disruptions in Pakistan

Countries around the world have started to experience the economic impact of COVID-19. On the domestic front, the social distancing measures, especially the lockdowns, have resulted in restricted mobility and supply shortages. This, combined with the fall in global trade arising from import restrictions and postponements/cancellations of export orders, has considerably slowed the economic activity down. Countries that are part of the global value chain (GVC) would feel the hit even if spread of Coronavirus is contained now and has not disrupted the internal economic functioning of the economy. Several sectors of the economy have been affected by the ongoing lockdown in Pakistan. This bulletin focuses on the quantification of the potential loss in economic activity for the last quarter of FY 2019-20 resulting from trade disruptions. Although Pakistan may not rank higher on the GVC, the country has enough integration with the global market to feel the impact of international lockdown. The five major trade partner (with more than 50% share in trade) of Pakistan are China, USA, UK, Japan, and Germany. Four of these partners are also the worst hit countries by the COVID-19. The imports and exports in the last three months (December 2019 – February 2020) for these major trade partners is shown in Figure 1. There have been significant disruptions in the international trade flows of these countries. China and Japan experienced more than 15% reduction in their exports. Rest of the three partners had a reduction of around 5%. Some of them have also experienced reductions in their imports.