Impact of coronavirus on the consumer confidence

Uncertainty is worse than bad news. Some airlines in many countries have asked their employees to go on unpaid leave. There is a likelihood that the employees may be sent on forced leave without pay to cope with the unprecedented disaster globally. The coronavirus has infected over 135,000 people across the world and more than 4,900 people are believed to have died of the virus. In addition to Wuhan in China the cities such as Milan in Italy, Daegu in South Korea and Qom in Iran are the worst hit places. There are over 15,000 confirmed cases in Italy where coronavirus death toll has surged past 1,000 by the end of the last week. South Korea with 7,800 cases and 66 deaths and Iran with over 10,000 confirmed cases and 400 deaths are being discussed in media globally. Iran has asked the International Monetary Fund for a $5 billion loan to combat the spread of the virus.

The World Health Organization’s description of the outbreak as a pandemic was followed by the US President Donald Trump’s decision to restrict travel from Europe to halt the spread of coronavirus. This sent shock waves across the world with the concerns of poor trade and economic activities in the forthcoming days.

The economy of the United States worth ‎$21 trillion and the economy of China over $14 trillion seem to be in the grip of concern. The lockdown in some European countries has amplified the fear globally. The recent steps of Saudi Arabia and Qatar vis-à-vis travel restrictions from some countries have added fuel to the fire. The entire world seems distraught and baffled. Everyone is oblivious to the impending fallout on their family, profession and business. This is a situation of an unprecedented magnitude.

Pakistan seems geared up to cope with the aftermath. Some immediate and prudent measures have been taken in the first place, however, a lot more is yet to be done to ensure the safety of the entire nation. Pakistan’s economy would face the consequences of the global meltdown, however, there are ample opportunities in this trying time for Pakistan to capitalize on. Pakistan’s oil import bill would decelerate drastically in the wake of the tumbling oil prices trading in the vicinity of $30 per barrel. The dream of import substitution may come true since global imports and exports have been dwindling since the emergence of the virus in December. Imported pulses, spices, chemicals, tea, palm oil, plastic items etc. may be produced within the borders of the country and the local products may be valued more than the imported ones spurring local investment. Shares prices in markets worldwide have retreated by virtue of the dread of the virus. Markets across the world such as the US, the Europe, Japan, Thailand, India etc. plunged in double digits last week giving the feeling of déjà vu of the Black Monday crash of 1987. This may lead the investment in manufacturing sector generating more stable employment opportunities and the sustainable career for the youth. This opinion might be negated by those who are in favor of short-lived sustainability.

One has to quantify the impact of coronavirus on the feeble and debt-laden economy of Pakistan. Trade might undergo an ordeal due to the closure of borders, however, manufacturing might not be curtailed since the burgeoning population of over 210 million in Pakistan would be a gigantic support in terms of consumption. One prevalent concern discussed at every nook and corner these days is the input since Pakistan imports raw material from various countries. Pakistan is one of the leading importers of Chinese products approximating $17 billion. The restrictions of some buyers of the Pakistani-manufactured products regarding the Chinese raw material may be detrimental, which must be addressed sooner rather than later. In the wake of the paucity of the raw material erstwhile imported from China, the conundrums might emerge to an unprecedented level. There are certain manufacturers who have declared non-availability of the raw material for manufacturing. The availability and prices of the raw material in some countries other than China have become the cause of tribulation. The depleting inventories might prompt the manufacturers to buy the raw material at soaring prices causing double whammy.

The business community in Pakistan to some extent seems geared up to cope with the possible fallout and there are claims that the private sector has already made alternate arrangements for the import of raw material at higher prices impacting their bottom line.

The impact of inflation in the wake of paucity of imported products and the products manufactured using imported raw material might transpire in the next couple of months compelling the government to take some emergent measures to provide relief to the down-trodden stratum of the society. There is likelihood of the dissipation of the consumer confidence due to the prevailing uncertainty. Rest assured, God is there and the humanity would emerge victorious from this debilitating pandemic.