Restarting the coronavirus economy
With the global economy under immense pressure due to the COVID-19 pandemic, aggregate demand and supply have collapsed across various industries. This has led to a great deal of uncertainty among all types of businesses to continue operating, while the challenges posed by this pandemic are casting a long shadow over the economy. Until a vaccine is developed, this uncertainty is likely to persist.
According to a recently released report by United Nations titled ‘World Investment Report 2020’, global flows of foreign direct investment (FDI) will be under severe pressure this year as a result of COVID-19 pandemic. Inflow of foreign investments, especially to developing countries, will be hit the hardest. For a country like Pakistan that is heavily reliant on export-oriented and commodity-linked investments, these unfavorable conditions have already led to mass unemployment, reduction in tax revenue collection and a depleting state of economy which has led most businesses to freeze their expansion plans and await the high tide to pass over.
As per recent updates from the National Command Operation Centre (NOCC), monitoring the spread of Covid-19 virus in Pakistan, the curve appears to be gradually flattening following a consistent decrease in the number of daily reported cases. While good days appear not so far ahead, the economy will still take its due time to recover. Unless market leaders in various industries and sectors resume with their growth plans and inject more capital to stimulate the local economy. Many allied industries are also expecting market leaders to proactively jump start economic activity and create opportunities for them to recover. However, many are still shying away from leading courageously against all odds do their part to recoil market recession.
The State Bank of Pakistan recently reported an 88 percent rise in foreign direct investments (FDI) in July to June FY20, as compared to previous fiscal year, though the numbers were much lower than set targets, mainly due to the pandemic. However, this influx of capital was focused on the power, communication, and chemical sectors.
Pakistan’s retail sector is a major contributor to the country’s economic stability. According to the Chain Store Association of Pakistan (CAP), retail workers represent 16 per cent of the nation’s labor force; with the retail sector being the biggest source of skill development and value-addition to the economy. The success of the retail industry is further shared by over fifty allied sectors, including packaging, transportation, logistics, human resources, accounting, and IT.
Yet, as multinational retailers appear reluctant to expand their investment footprint due to uncertain situation, one market leader has stepped up to the challenge in supporting the country’s retail sector through job creation and providing support to local businesses. Carrefour, operated by Majid Al Futtaim in Pakistan, is driving through leadership to support its associated network of suppliers and allied industries during these difficult times.
The brand has already invested PKR 9 billion in Pakistan since the opening of its first store in 2009, primed to diversifying the country’s economy. Carrefour Pakistan operates nine stores in four major cities of Pakistan, including Lahore, Karachi, Islamabad, and Faisalabad, with the ninth store recently inaugurated in Lahore. This new store will create more than 200 direct and indirect employment opportunities, adding to the currently employed pool of more than 3000 professionals working at Carrefour stores across Pakistan.
Jean Marc Dumont, Country Manager of Carrefour Pakistan at Majid Al Futtaim Retail, said: “With the opening of our ninth store in Pakistan, Carrefour has reconfirmed its commitment to help hundreds of small businesses, suppliers and farmers associated with our retail operations so they can jump start their stale business activities and recover from the financial stress and losses they have incurred due to this pandemic.”
However, further efforts and commitment is required by all market leaders across various sectors and industries to restore market confidence and stimulate economic activity for a swift recovery. Government can also help by extending tax rebates and formulating favorable policies to encourage multinational and local businesses to reopen and reinvest. These joint actions taken today will certainly go a long way to attract more foreign investment to Pakistan and map out an improved trajectory for the economic recovery of Pakistan.
— The writer is a freelance
columnist.
Article source: https://nation.com.pk/09-Sep-2020/restarting-the-coronavirus-economy