The shutdown of businesses will lead to a decrease in personal income meaning big purchases on things like cars or appliances will be postponed. This in turn could affect the reduction of gas consumption in welding and cutting applications in general manufacturing, gasworld BI said.
Gas consumption in the food industry and carbon dioxide may go down due to less air travel and the cancellation of large public events.
Pakistan today announced it is shutting all of its land borders and limiting international flights for 15 days.
The country borders China, where the coronavirus (Covid-19) originated, and Iran which is one of the worst-hit countries.
Risha Mohyeddin, Global Treasurer at HBL Bank, Pakistan’s largest bank, has written the below on the expected impact of Covid-19 on Pakistan and its economy:
There will undoubtedly be a significant and tragic human cost if Covid-19 takes hold in the Pakistan population as much of the population lives in close proximity to each other. That said, there are factors that may slow spread of the disease into Pakistan.
Screening is being introduced at airports; while Pakistan’s land border with China is impassable at this time of year, and any travellers from there will be quarantined for 15 days.
Movement between Pakistan and Iran is now blocked, and travel to or from India and Afghanistan is very limited in any case.
The impact on the economy will largely be dictated by government action and any impact on Pakistan’s export sectors.
Thus far the government has not declared Covid-19 an epidemic and few measures have been taken that will hinder economic activity.
Anyway, we believe the government will weigh the risk from the disease in the context of other existing health risks in the population.
Given the domestic focus of the economy it should be less impacted by travel bans and slowing international trade than other more externally-facing developing economies.
Pakistan’s textile export sector relies on China for the bulk of its capital goods inputs, so there will be an impact if there is a protracted closedown of the Chinese economy.
One thing we will be watching closely is any signs that – due to the Covid-19 outbreak and the associated measures taken by the respective governments – the Chinese authorities are forced to slow down their rollout plans for the China-Pakistan Economic Corridor and the development of the Gwadar international deep water port and its associated infrastructure, which offers western China direct access to international shipping routes.
Despite the uncertainties ahead, Pakistan’s economy has stabilised greatly in recent years. Until a few years ago, the security situation and lack of reliable power supplies had discouraged foreign direct investment and local investment. Both of these are much improved.
The rupee was unsustainably high – this led to a ballooning of imports. Following the devaluation, the import quotas on capital goods have eased and the currency is at a more competitive level from which the economy should be able to enjoy a moderate level of sustainable growth (4.5%-5% pa).
While we cannot assume oil will remain in the mid $30s, the Pakistan economy, as a net oil importer, should benefit from lower oil prices.