Forecasting the Economic Impact of Coronavirus on Developing Countries: Case of Pakistan

Abstract

The Coronavirus (COVID-19) pandemic has already wreaked havoc on the international economy in numerous ways, differentiating itself in particular through its impact on the “real world” economy as opposed to financial market-specific damage. Both developed and developing countries are seeking to grapple with the pandemic, and all face limitations in their resource capacities; with the shortfall being more acute in the developing world. The aim of this working paper is to present some limited forecasting through scenario analysis using an aggregate demand approach for Pakistan, so as to illustrate the possible multidurational economic impacts from the COVID-19 pandemic. The findings suggest that, FY20 declines will be massive, but faster global and local recovery rates might spur a resumption of economic activity in FY21.

Keywords: coronavirus, pandemic, COVID-19, developing country, expenditure, national income, GDP, macroeconomics