post flood impact on pakistan economy new

ASAD WAZIR ALI

NAVEED KHAWAJA

ABDUL AHAD SIDDIQUI

RAVI KUMAR LASSI

AZHAR HUSSAIN

Presented To:Syed Qamar Ali Zaidi

FLOOD AFFECTED AREAS North Western regions

faced heavy rainfall- KP, GB, AJK and Balochistan

A moving water body equal to the land mass of UK

One-fifth of the whole country was under water

Most damage- Sindh Irrigation structures

destroyed• Amandara Headworks• Munda Headworks

Flood Peaks• Nowshera Town• Chashma Barrage • Taunsa Barrage • Kotri Barrage

Destruction of life and property According to NDMA

78 out of 124 districts were affected20 million people (10% Pakistan’s

Population)1600 deaths1.6 millions homes destroyedAround 3000 injured

Pre-Floods Economic Scenario External Economic position was improving

significantly Current account deficit to 2% of GDP 2009/10 SBP Forex to US$ 13.1 Bn at the end of Jun

2010 GDP by 4.1% But inflation to 12-13% as fical defcit 5.1%

Economic Impact Major Economic Damages from assets lost

One major Gas field 6 Power plants destroyed (power shortfall rose from

4500MW to 6000MW)

PEPCO claims losses of US$ 47M1000 villages in S.Punjab are without power where new

poles & wires are required

Private Sector Losseshousing, business premises, livestock, dairy farms, fish

farms, agriculture land and crops, furniture etc, etc.

Total Damages = Direct + Indirect Losses

Direct Damage – monetary value of completely or partially destroyed assets

Indirect Losses – income losses & change of flow of goods & services & other economic flows

Total Damage Costs by Sector

Percentage Damage by Province/Area

Estimate of Total Damage Costs by Sector

AGRICULTURE 50% of overall losses

is in this sector Amounts to Rs 429

Bn of loss 89% of this is

cropped agricultureExpected 3.5%Actual 10%

(major crops 7%)

(minor crops 20%)

LIVESTOCK Heavy losses of Rs.

48 Bn Expected 3.5% Value added 0.6%

INDUSTRY Direct damage to infra

structure Indirectly affected Input losses- textile &

food preparing sector

Estimate of Total Damage Costs by Sector

INFLATION Highest of 2.5 % was

in Sept’10 Reason

Flood damages to crops Heavy government

expenditures

State Bank RemediesRaising policy index rates

by 0.5% in July and Sept

GDP 20% chunk of GDP is from Agriculture

alone, and 1.93 M acres of land is damaged

20% of cotton crop destroyed Before flood: budget deficiet – 4.5 % of

GDP, now it to 6-7% of GDP Credit rating is B3 (adequately captures

the risk) which is just above C rating (sovereign default of the country)

GDP Graph (2007-2010)

Balance of Payments The fiscal deficit was expected to from the 2%

of GDP 2009/10 Since the disaster, the conditions are expected

to worsen further 2 M bales of cotton is lost (loss for the textile

industry) Cement – will be used for reconstruction

therefore won’t be exported in imports of food, fuels, construction material

and machinery

Conclusion Economic recovery is getting difficult

Persistent inflationFiscal slippagesPower sector issuesPrices of fuel & energyPost-flood supply chain of foodGovernment borrowings from SBPNarrow tax base tax to GDP ratio

Conclusion (cont’d)

Cost to the economy is being paid through erosion in the purchasing power of the

rupeegrowing total debt

discouragement of productive private sector activity.

Regional Imbalances Affected areas were already

underdeveloped and economically weak

Conclusion (cont’d)

Unemployment Loss of income (from crops and livestock)Loss of business assets

Poverty would drastically and will enter the urban areas as well

Inflation due to the shortage of food items and mobility of peoples in search of employment affects the entire country.

Images

Images

images

Images