The coronavirus challenge

Asian Development Bank yesterday reported economic losses could reach $ 347 billion as over 95,000 people diagnosed with coronavirus (Covid-19). This disease has caused 3,015 deaths in China and 267 deaths outside the people's republic. On March 3, Harvard Business Review highlighted (i) indirect hit to confidence with a more powerful impact on advanced economies where household exposure to equity asset class is high; (ii) direct hit to consumer confidence with lower sales of discretionary spending; and (iii) supply disruption with a reduction or halt in production disabling critical components of supply chains. The first two factors affecting demand account for the recent decision of the Federal Reserve Board to cut rates by half a percentage point during the G-7 meeting with the other six countries pledging unspecified "appropriate" policy moves - a rate cut that President Donald Trump, with his eyes on his re-election bid this November, said was not enough.

Be that as it may, supply lines cut from China are adversely affecting those industries reliant on imports from China, including Indian textile sector, and so far the gap remains unmet. Our industry and trade too is highly dependent on meeting their requirement of raw material and goods from China. The prospects of disruption in such supplies from China are rather high unless there is a significant improvement in overcoming this menace.

More tellingly, the Harvard Review maintained that: (i) microeconomic legacy of crises, including epidemics, has been a spurring of adoption of new technologies and business models, citing the rise of Alibaba's online shopping post SARS outbreak in 2003, the Covid-19 may have already demonstrated a new public health tool after Wuhan's attempt to contain the crisis through digital efforts; (ii) macroeconomic legacy is progress towards a more decentralised global value chains; and (iii) political legacy as it tests the political systems' capacity to protect their populations.

In the case of Pakistan so far, coronavirus appears to be contained with Health Minister Dr Zafar Mirza giving periodic updates on the situation. The source of the virus is Iran with the expected return of between 6,000 to 10,000 Pakistani pilgrims and the government is seeking to quarantine them. Chief Minister Sindh Syed Murad Ali Shah has stated that the province has identified about 1,500 people who have returned from Iran during the past two weeks, adding that "all of them will be quarantined for 15 days." Shah further stated that 28 individuals may have been exposed to this deadly virus in Karachi and 5,000 across the country.

The focal person for coronavirus in the province of Balochistan, Dr Gichki, stated that containment of the virus "is a huge challenge and an uphill task. We, with the help of Provincial Disaster Management Authority (PDMA), are focusing on developing a quarantine facility for these up to 10,000 pilgrims who will start arriving here from next week." Punjab has no confirmed case with no statement on the subject issued by the provincial government yet while Khyber Pakhtunkhwa government released 100 million rupees as a precaution for the containment of coronavirus on 26 February 2020 though those suspected were cleared of the disease.

Pakistan with a fragile health system will no doubt will be unable to cope with the spread of the disease on the same level as in China; however, it appears that appropriate decisions of a lockdown across our border with Iran, screening of passengers returning to the country and establishing quarantine facilities are in place. One would sincerely hope that these containment measures are enough to check the spread of the disease in Pakistan as we simply do not have the resources to deal with a crisis situation like in China, Iran, South Korea and Italy.