Investor Presentaiton
Chapter VIII - MSMEs - Revitalizing Punjab's Economy
akistan and the Province of Punjab are no exception to the macroeconomic challenges arising due to COVID-19 outbreak.
Enterprises around the country are already facing the consequences of the closure of economy. Many economists contend that the
economic crisis that COVID-19 emergency has ensued will be longer-lasting and will have more far-reaching implications than the
immediate healthcare crisis.
30-40% reduction
WTO's early estimates show reduction in global trade
as the economies fightback against the pandemic
USDO9 trillion slashed
ERNATION
slashed from global output with global
ONETARY
worse than during the 2008-09 financial
growth estimated at -3.0 % in 2020 -
crises
Na
Lack of aggregate demand
Lack of aggregate demand across the globe
has resulted in job losses, closure of small-
and medium-sized businesses and has
drastically altered the way countries do
business with each other
90% of enterprises,
Micro, Small and Medium Enterprises (MSMEs) stand to lose the most as they account for more than 90% of economic activities and more
than 50% of the jobs in the developing countries. SMEs have played a key role in the
development of economies like those of South East Asia. In Pakistan, SMEs
constitute nearly 90% of enterprises, employ 80% of the non-agricultural labour force,
contribute more than 40% to GDP and over 40% to exports. SMEs significantly
contribute to the economy in multiple ways through employment creation, human
resource development, value addition, innovation and services and small-scale
manufacturing support to Large-Scale Manufacturing and industrial establishments.
Economic Impact Assessment
employ 80% of the non-agricultural labor
SMES
40% share in GDP,
over 40%+ share in exports
Initial estimates have shown that the Pakistan's economy will witness sluggish growth
in services, manufacturing and agriculture sectors, increase in unemployment,
decrease in Government revenue, decline in exports and disruption in supply chains.
Closure of businesses across the country is expected to make the situation dire for the estimated 5.2 million enterprises in the country. Micro,
Small and Medium Enterprises (MSMEs) have been particularly hit through supply chain disruptions owing to irregular supply of raw materials
and intermediate goods, revenue loss and shortage of liquidity to continue business operations. However, the magnitude of economic losses
is uncertain and depends on intensity and duration of COVID-19 as it is still an ongoing challenge.
Real GDP growth projections vary from negative to positive. IMF estimates Pakistan's economy may contract by 1.5%. World Bank's Outlook
for Asia report has suggested that that Pakistan's economy would move to negative growth (-1.2% to -2.3%) which translates into economy
shrinking by about 10 percent for this to happen. Pakistan Institute of Development Economics (PIDE) has conducted some estimations of
economic loss and their results show that GDP will suffer a loss of anywhere between 0.3 percent to 4.64 percent. In case of Punjab, some
estimates have been developed on the size of economic and employment losses. The existing estimates predict an economic loss to Punjab
in the tune of USD3-5 billion and short-term employment loss of 4-6 million. Pakistan Institute of Development Economic (PIDE) estimates
translate into Punjab losing USD500 million to USD8.1 billion. Punjab's Planning & Development Board has estimated an export revenue loss
to the tune of USD1.3-3 Billion to the Province (See Chapter on Macroeconomic Outlook for a more detailed analysis). These economic
losses will eventually translate into job losses and retrenchment of employment options for the labour force in MSMEs.
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