What is the effect of the Covid19 pandemic to deposit interest rate and repo rate of the State Bank of Pakistan?
Answers
Answer:
Pakistan has been one of the countries worst affected by COVID-19, with the economic disruption caused by the pandemic exacerbating an already existing crisis. This paper discusses how the public health crisis has affected some of the most critical sectors of the Pakistani economy. While the government has implemented some mitigation measures, they are inadequate to counter the impact of the pandemic. The paper analyses the likely fallout of a near-meltdown of Pakistan’s economy on the nation’s hybrid political system that is dominated by the military. Finally, it examines the possible impact of Pakistan’s economic crisis on its strategic environment and strategic alignments, especially its relations with India.
Answer:
The COVID-19 crisis started as a supply side shock that morphed into a demand shock. High uncertainty and strict lockdown measures are increasingly weighing on the economy, leading to a rise in private savings in the short run. The fall in aggregate demand is, at least partly, compensated by higher government spending, as governments announced substantial fiscal policy measures. While changes in public savings can be seen as a mirror image of private savings in the short run, the effects of the COVID-19 outbreak on aggregate savings are less clear going forward.
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