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Thursday, February 29, 2024

Flood-related economic losses escalate from $10bn to $12.5 bn

Pakistan is confronting massive devastations caused by monsoon flooding that has left over 33 million people in desperation and taken the lives of over 1300. Flood-related economic losses in Pakistan have escalated from USD 10 billion to USD 12.5 billion. According to a News channel, inflation is expected to rise to a range of 24 percent to 27 percent this fiscal year, eventually reaching 30 percent. As per the government, flooding in 118 districts affected 37 percent of the population.

Read more: How the floods caused heavy damages to Pakistan

Rural areas in Pakistan have been hit the hardest by flooding, which will have a compounded impact on Pakistan’s farming industry, and ultimately the cost of food. The price of onions in Pakistan’s urban areas climbed by 89 percent between July 2021 and July 2022. That cost increase exceeded 100 percent in rural areas.

The State Bank of Pakistan revealed that growth would be reduced from 4 per cent to 4.5 per cent to 2 per cent for the current fiscal year. Agriculture growth was significantly hit in the aftermath of the floods, and the value addition of agro growth in the range of Rs500 billion might be lost in the current fiscal year. Targets of the agriculture growth and the services sector were both severely impacted.

On the eve of the budget for 2022-23, the country’s GDP growth has been anticipated to shrink by 3 percent, lingering around 2 percent of GDP, compared to the initially envisaged growth rate target of 5 percent.

The significant economic losses may aggravate as the SBP’s methodology is projected to calculate losses based on disrupted economic operations in all districts and tehsils in flood-affected areas.

The SBP has been assessing the agricultural sector’s exact losses using SUPARCO satellite images. Google has also committed to assist the government calculate the aggregate losses to agriculture and physical infrastructure.

The Federal Minister for Finance Miftah Ismail stated that the damage in this flood is estimated at 10 billion dollars.

Bilawal Bhutto Zardari, the country’s foreign minister, told CNBC’s Dan Murphy Thursday that he fears the damages from the natural disaster will exceed current estimates of $10 billion, adding that the crisis in the country is still ongoing and in the “rescue and relief phase.”

“Pakistan at this point in time, are paying in their lives and in their livelihoods for a climate disaster that is not of their making,” he said. Pakistan’s contribution to global carbon emissions is less than 1 percent, but it’s among the 10 most affected countries in the world by climate change.