By Ayesha Saba ISLAMABAD, Oct. 26 (INP-WealthPK): The COVID-19 pandemic has severely jolted the entire world by bringing GDP down and increasing unemployment in both formal and informal sectors. To contain the spread of the virus, governments all over the world slapped strict lockdowns, and employees in many sectors have to work from home. Like many other developing countries, Pakistan too faced a substantial economic slump, and its major sectors like agriculture, industry and manufacturing suffered the worst due to supply and demand shocks. Around 71 percent of the country’s non-agriculture employment is in the informal sector, where the workforce is largely undocumented and depends on daily wages. Unskilled or low-skilled daily wage employees engaged in the industry, services, and agriculture sectors were hit hard with difficulty in making their ends meet. Unavailability of labour force, slowdown of production, shortage of raw materials, and transportation restrictions further slow down the economic wheel. Pakistani government's policy of smart lockdowns kept the wheel of the economy moving to save a big chunk of people from unemployment and prevent industries from total collapse. The smart lockdown policy drew praise at the international forum. The government and the State Bank of Pakistan announced relief packages for the business and industrial sectors as a cushion against the financial losses. Ehsaas program was launched on April 1, 2020, and an amount of Rs144 billion was set aside to minimize the hardships of vulnerable households. Under this program, Rs12,000 has been provided to 12 million vulnerable families. The government also announced an economic package of Rs1.3 trillion to reduce the financial burden. The lockdown in the second quarter (April-June) put at least 4 million people out of work. However, the majority of them went back to work after the lockdown curbs were lifted and the economy started to look up in the third quarter (July-September). During the period from June to December, the current account recorded a surplus of US$1.1 billion. Foreign direct investment (FDI) decreased during the period, but the improved current account supported a balance of payments surplus. The Pakistani rupee appreciated by 5.4 percent against the US dollar from end-June 2020 to end-December 2020, and official foreign exchange reserves increased to US$14.9 billion at end-December 2020, equivalent to 3.3 months of imports of goods and services. Another encouraging development is that China has extended the currency swap agreement with Pakistan to another three years. The agreement allows the parties to exchange payments in one currency for equivalent amounts to facilitate bilateral trade settlement and provide liquidity support to the financial markets. This bilateral trade agreement is worth around $18 billion on an annual basis. If this agreement is fully implemented and trade starts in local currency, the Pakistani rupee will strengthen against the US dollar.