ISLAMABAD,  (Xinhua) -- The outbreak of COVID-19 has raised grave concerns for countries across the world as it affected the developed and developing countries alike.

Pakistan's economic woes got worse with the outbreak of the pandemic as the government has to treat the over 7,000 infected patients, impose a nationwide lockdown and provide relief to the affected people and industrial sectors.

The sudden outbreak has taken a serious toll on the country's progress as most developmental projects and operations at industries had to be halted during the lockdown. The economy that began showing signs of improvement with steady growth of foreign exchange reserves, betterment in current account and a stable outlook from global credit rating agencies, got a shock by the disease.

"Amid COVID-19 outbreak and subsequent lockdown in the country, local manufacturing was halted. Services sector also shrunk and small and medium enterprises also got affected. Only a small economic activity was seen in pharmaceutical, retail and food sectors, which was not enough to keep the economy stable, resulting in an overall slowdown of the economy," Ali Kemal, an economist with the Pakistan Institute of Development Economics, a think tank under the Ministry of Planning, Development and Special Initiatives of Pakistan, told Xinhua.

A recent World Bank report even predicted that Pakistan may fall into an economic recession owing to the outbreak of COVID-19 in the country. "Output is expected to contract sharply in the fourth quarter of FY20 (July 2019-June 2020), bringing overall FY20 growth to -1.3 percent. These developments have put pressure on Pakistan's fiscal position, as tax collection is being adversely impacted while spending needs are increasing."

Pakistan was already facing problems to meet the tax collection target of 5.238 trillion rupees by the end of FY20, according to the State Bank of Pakistan, and the extra spending on health and welfare system by the government has made the situation worse.

Joint Secretary at the Ministry of Commerce of Pakistan Hamid Ali told Xinhua that due to the COVID-19 outbreak across the world, the demand of Pakistani products from abroad also got weakened.

"Textile industry which is the backbone of Pakistan's export sector has been badly affected due to the COVID-19 lockdown within the country and low consumer demand from abroad, particularly from the West. The situation not only affected the economy but also had an impact on the lives of daily wage laborers and others associated with the sector," Ali said.

According to the country's Ministry of Planning, Development and Special Initiatives, about 12.3 million to 18.5 million people are feared to lose their jobs in the spreading pandemic.

To address the problem, Prime Minister Imran Khan announced a massive relief package of 1,200 billion rupees (7.19 billion U.S. dollars) for providing financial support to different sectors of the economy, and 200 billion rupees out of the package was allocated for the labor class and daily wagers, and 200 billion rupees more for industrial sector and small and medium enterprises.

According to sources from the Ministry of Planning, Development and Special Initiatives, the country was expecting remittances worth 24 billion U.S. dollars in FY20, but a sharp decline in the remittance has been witnessed during the last two months due to the global outbreak of COVID-19, leaving thousands of Pakistanis across the world jobless, and the downtrend in remittances is feared to last in the remaining months of the FY20, which will be another blow to the economy bearing the brunt of the pandemic.

The State Bank of Pakistan on Thursday also predicted that the country's economy is expected to contract by 1.5 percent in FY20 due to exceptionally high uncertainty about the severity and duration of the coronavirus shock, before recovering to around 2 percent growth in FY21.

However, some experts believe that despite the negative outlook and discouraging indicators, Pakistan's economy has the potential to show resilience in the tough conditions.

"Agriculture has remained a strength for Pakistan's economy, and this year too. The country is expected to get a bumper wheat crop which is being harvested currently. Despite a halt in industrial exports, agricultural exports can make its contributions to the economy," Pervez Tahir, former chief economist of the Planning Commission, a financial and public policy development institution of the Pakistani government, told Xinhua.

The potential of unregistered informal economy and small scale sector cannot be ruled out either and they may play a substantial role to improve the economic condition of the country in the post COVID-19 scenario, Tahir added.

The G20 gave a debt relief to the developing countries including Pakistan due to the uncertain economic situation caused by COVID-19 outbreak. Pakistani Prime Minister Khan and other senior officials welcomed the decision as Khan himself was among the first leaders in the world which appealed the international lenders to provide some respite in the loans which developing countries owe to them.

"The tax relief is a temporary respite, but it will help Pakistan to repair its economy in the meantime, and the looming threat of paying 10 billion U.S. dollars to 12 billion U.S. dollars on debt servicing has been averted for the time being, saving the country from falling into a deep economic crisis," Kemal told Xinhua.

Pakistan is among the most philanthropist nations of the world, and the Pakistani people living inside the country and abroad donated a lot to the government's fund during tough situation arose by the earthquake in 2005, and floods in 2010. This time again, Khan appealed the nation and philanthropists to contribute to the cash-strapped government's fund to help the country steer out of the COVID-19 crisis.

According to a senator of the ruling party, Faisal Javed Khan, over 1.49 billion rupees have been submitted to the fund during the last 15 days till Thursday, and more contribution are being made to the fund, giving a cushion in the government's fight against disease and consequent hunger.

The China-Pakistan Economic Corridor also has a great potential to uplift the industrial sector in the country through special economic zones (SEZs), being established under the multi-billion-dollar project to facilitate local and foreign investors to set up and relocate industries across the country.

"The SEZs are the silver lining and the ray of hope for Pakistan in the post COVID-19 scenario. We are trying our best to facilitate businessmen and establish industries in the SEZs. If we succeed in attracting investors and make SEZs a success story, our exports will increase and ultimately our economic woes will be solved," Zafarul Hassan Almas, chief of macroeconomics section in the Planning Commission, told Xinhua.  (1 U.S. dollar = 166.70 rupees) ■