Estimating the Economic Impacts of the First Wave of COVID-19 in Pakistan using a SAM Multiplier Model

The services sector was hit the hardest, registering losses of 17.6 percent, followed by industry with losses of 6.7 percent. Agriculture, however, turned out to be resilient and remained relatively unhurt, falling by 2.1 percent. The pandemic also had a significant impact on household incomes, with all households witnessing a reduction in incomes. However, higher-income quartiles appeared to have lost more than lower-income ones. The government's Emergency Response Packages (ERP) were implemented to mitigate the effects of the pandemic, with a total government expenditure of PKR 318.6 billion (USD 2.12 billion) directed towards different kinds of households. This led to a reduction of about USD 3.1 billion in GDP losses, which, compared to the amount spent, implied a multiplier of 1.4 in GDP per PKR spent. The national poverty rate soared to 43 percent and 38.7 percent in April and May respectively, due to the pandemic. However, the government's cash transfers program proved highly effective and led to an 11 percent reduction in poverty rate during the pandemic. The recovery scenarios indicate a cumulative GDP loss of USD 11.8 billion and 11.1 USD billion under slow and fast recovery scenarios, respectively, by December 2020. Pakistan's annual GDP (at market prices) is expected to register a decline of 4.6 percent in the year 2020 due to negative effects of the pandemic and sluggish economic recovery. The government's Emergency Response Packages (ERP) were implemented to mitigate the effects of the pandemic, with a total government expenditure of PKR 318.6 billion (USD 2.12 billion) directed towards different kinds of households. This led to a reduction of about USD 3.1 billion in GDP losses, which, compared to the amount spent, implied a multiplier of 1.4 in GDP per PKR spent. The national poverty rate soared to 43 percent and 38.7 percent in April and May respectively, due to the pandemic.