China informed the World Health Organization (WHO) about several cases of a disease identical to pneumonia as the New Year celebrations were taking place across the country. The cases were traced back to a seafood market in the city of Wuhan.
The disease was identified as a new form of coronavirus and the first death was reported on 11th of January 2020 in Wuhan. On 26 February 2020, Dr Zafar Mirza, the Prime Minister’s Special Assistant on Health, confirmed Pakistan’s first two cases.
Covid-19 has landed the world in one of its biggest crises and the worst economic meltdown since the great depression in 1929. The jolt received may take the world several years to recover from, as compared to, the expected V shape recovery that economists initially suggested.
The outbreak of coronavirus forced governments and nations throughout the world to go into lockdowns to contain the surge in infections and deaths. Pakistan imposed a lockdown from 24 March 2020. In December 2020, the OECD predicted that the British economy would still be 6.4% smaller towards the end of 2021 than it was in the fourth quarter of 2019.
Due to smart lockdowns, in 2020, Pakistan has fared relatively well, with IMF estimating contraction of -0.4% real GDP growth in 2020, as compared to India’s -10.3% for the year. Before the pandemic, Pakistan was forecasting a growth of 3.3% for 2020. According to the ADB, Pakistan will have a 2% growth in 2021.
Different industries were hit disproportionately by the pandemic, for example, among the most vulnerable were the tourism and the aviation industry, as compared to the tech industry or industries where work from home model was sustainable. Nevertheless, job losses engulfed all industries to some extent.
UN’s International Labor Organization estimates that as many as 1.6 billion informal economy workers will go through a “massive damage” of livelihoods. Unfortunately, many of these will not get their jobs back even when the economy recovers, as jobs are shifted offshore or towards more automation.
In Pakistan, rough estimates show that millions had to either take pay cuts or lost jobs. One estimate from Pakistan Institute of Development Economics (PIDE), has estimated a loss of 18m jobs in agricultural, services and industrial sectors. The Ehsaas Emergency Cash financial relief program was launched on April 1 to counter the expected jump in poverty, after people lost jobs due to Covid-19; over 31m applied in the first week.
Corona hit hardest the global trotting sectors
The global economic meltdown is expected to take years before the world reaches pre-pandemic economic activity even after the availability of a vaccine. Among those affected includes the aviation industry which collapsed as lockdowns stopped international travel for months and even when countries opened, they set quarantines for those travelling.
Australia and New Zealand locked down for months; the UK created lists of safe countries; with others requiring ten days quarantine. Pakistan opened its international borders after a lockdown of almost six weeks. Currently, people arriving back from international destinations have to go into 14 days of isolation.
The global airline industry saw air traffic falling by almost 60%, resulting in losses close to $100 billion for the aviation industry in the year 2020. A drop of overall 40% passengers in 2021 is expected to lead to losses of around $37 billion. International Air Transport Association (IATA) represents 290 airlines around the world, and according to it; the aviation industry has received a total government aid of $175 billion.
During this period Pakistan’s state-owned PIA did not layoff any workers despite incurring losses of approximately PKR Rs32 billion in 2020, because of covid-19. It has only recently announced a voluntary separation scheme for around 2500 people, it has a total staff of 15,000 and has one of the highest ratios of employees to aircraft in the world.
Tourism and Hospitality sector
According to the United Nations World Tourism Organization (UNWTO), the tourism and Hospitality sector saw precipitous drops as international tourist arrivals declined by 70% from January to August 2020. The number of international tourists has fallen by 700 million, a loss in export revenues worth almost $730 billion globally (8x the loss industry suffered in 2008-9 financial crisis).
It is the worst period in the tourism industry since the 1950s. Under PTI government’s vision, tourism was to play an essential part in creating economic growth and jobs. Events like the visit of royal couple Prince William and Kate Middleton, the visit of chief monks of South Korea in 2019, and Pakistan topping the Condé Nast Traveler’s list of best holiday destinations for 2020 in December 2019, were to play a significant role in putting Pakistan on the international map of tourism.
Pakistan also hosted thousands of Sikh pilgrims in November 2019, through the landmark project, Kartarpur Corridor – completed at a record time of 9 months by FWO to celebrate the 550th birthday celebration of Baba Guru Nanak Dev, the founder of Sikhism.
Covid-19 brought all of Pakistan’s efforts, government’s programs to revive tourism and hopes of domestic and international tourists to a painful halt. Khyber Pakhtunkhwa, the province where some of the most scenic sites are located has suffered an economic hit worth approximately $20 million due to loss of tourists – accounting for almost 260,000 direct job losses and many more jobs indirectly.
Hotel and Restaurant Industry
The Hotel and Restaurant Industry has also suffered the consequences rooted in the Covid-19 outbreak. In the USA, during the first three months after the pandemic hit restaurants laid off 3 million workers with a loss of $25 billion to the economy. It has been estimated by the US National Restaurant Association, that first half of 2020, saw over 150,000 restaurants permanently close. In the case of Pakistan, restaurants took a hit when at March 24, the government banned all dine-in eating and only allowed deliveries – and initially, that too was only for 4-5 hours in the day.
According, to the All Pakistan Restaurants Association, the industry downsized by 5 million workers from March to May 2020. SOPs were devised to contain the virus, and preventive actions were taken so as to stop hotels and restaurants from becoming hotspots of coronavirus. At least 1000 restaurants permanently closed in Lahore, alone.
Reasons to be Optimistic
Where some businesses are bleeding badly amid Covid-19, some have never been any better; it seems that dusk of many has become dawn for few. The tech sector has seen a rapid growth amid pandemic. The shares of Zoom – a platform which offers technology to facilitate online group meetings and video call – have risen over 300% on the year. People sitting home with fewer options to kill time, saw online streaming services such as Netflix and YouTube getting an influx of new viewers.
In the USA, online sales grew more than 31% during the second quarter of 2020. Almost 16% of all US sales have shifted to online sales, from 12% last year. Similar trends were observed in the UK, which saw online retail sales in October 2020 grow to 28% from 19% in October 2019. In Pakistan, similar patterns have been observed as Tech companies have reported a rise in online sales and thus expansion of various departments to cope with it. Priceoye.pk, for instance, an online mobile retail site has expanded its customer care section to deal with online customers.
Telemart, another online shopping platform, has experienced a spike in its sales by 600% as compared to the pre-pandemic times. Similarly, the sale of mobile phones and laptops in the country has also witnessed a rising trend. Mobile phones sold during FY2020 were worth $1.4bn as compared to $700mn in FY2019.
Vaccines: The Way Out
As of December 2020, five vaccines are heading towards phase-3 clinical trials and or approvals.
The Oxford’s AstraZeneca Covid-19 vaccine was created as a joint venture between the University of Oxford and AstraZeneca. It is an adenovirus-vectored vaccine taken from the common cold that normally infects chimpanzees. The effectiveness of the vaccine varies from 70 to 90% depending on the dosage. This can also be stored in normal refrigerators, at 2-8 degrees Celsius. The expected price of the vaccine is around $4.
Massachusetts-based Moderna Inc. in partnership with National Institutes of Health. Based on messenger RNA (mRNA) technology. The vaccine is identified to be 94% effective. Moderna’s vaccine maintains its effectiveness for 6 months if kept under -20 degrees Celsius and for 30 days in a standard medical refrigerator. The expected price of the vaccine is around $33.00.
Pfizer’s Vaccine developed by Pfizer (US based Pharmaceutical firm) and BioNtec (Germany based pharmaceutical firm). The vaccine is based on messenger RNA (mRNA) technology, and is the only vaccine approved to be used on general population anywhere in the world – has been approved in the UK – to be used in 70 hospitals across the country – and Canada. The vaccine has an efficacy rate of 95% and remains effective if kept under -70 degrees Celsius. Expected price is around $20.
Sputnik V developed by the Russian Gamaleya Institute has entered phase III of its developments in combination with the Astrazeneca vaccine AZD1222. Based on the human adenovirus rather than mRNA. Interim results showed 95% efficacy. The dry form of the vaccine can be stored up to temperatures till +2 to +8. The developers claim that such a wide range enables effective distribution to international markets, especially tropical areas. The price is suggested to be $10 and the availability is expected by February 2021.
Sinovac, Beijing based pharmaceutical giant’s CoronaVac. It is an inactivated vaccine, which will work by using dead viral particles to expose the body’s immune system without harming it, a more traditional vaccine. It can be stored up to standard refrigerator temperatures of 2 – 8 degree Celsius, Price is yet to be disclosed. 1.8 million vaccine doses are expected to be shipped to Indonesia by January 2021. China has promised it will first sell to those countries that participated in its trials. Pakistan is one of those countries.