Eid economy recuperates
EID amid the pandemic was expected to be different in Pakistan. However, after the lockdown ended on May 18 following the Supreme Court`s order, the holy festival ended up being not as private or simple as projected earlier.[TOP]
It is hard to shrug off the fear that this Eid could turn out to be the last one for some foolhardy urbanites as the virus spreads and the death toll continues to rise. Some sensible Pakistanis might still choose to celebrate the holy festival indoors and socialise virtually.
After two months under the lockdown, people in major cities swarmed the markets once allowed and the pent-up demand exploded in the face of caution.
The mad rush in markets rendered standard operating procedures (SOPs) to contain the spread of Covid-19 redundant.
The overwhelmed shopkeepers had to use physical force at times to drive customers out of their premises at closing time.
The Eid market loss of eight weeks of lockdown is not expected to be compensated perfectly in one week. Overall, business took a massive hit. In major cities, the dip is said to be as steep as 75 per cent year-on-year. But on a macro level, the loss is perhaps much less, according to background research. The projected quantum of Eid spending in 2020 at Rs560 billion across the country was a good 70pc of the last year`s Rs800bn despite the pandemic.
The dejected city traders who in the end succeeded to sway the Supreme Court to their side blamed the government instead of the pandemic for what they called the `financial slaughter`.
`There is no case for a cure that hurts the body more than the disease,` said a top trader who was confused by the government`s response to Covid-19. Leaders of trade bodies in Karachi and Lahore insisted that the market has slumped by 75-80pc this Eid season. `Our expectations were already moderate this year because of a slacking economy and the erosion of family income. But the prolonged lockdown sealed our fate,` commented a leader, dismissing the higher mortality threat as a figment of imagination.
`We will be lucky if total sales are even 20-25pc of last year`s,` said Ateeq Mir, chairman of the All Karachi Tajir Ittehad, over the phone. `The situation could have been better had the government heeded our advice of smart lockdown five weeks back.
Dr Hafeez Pasha, former federal minister, contested the claims about a vertical drop in sales citing the TV footages of bazaars. In his opinion, the Eid economy will soar to 60-70pc of last year`s estimate despite curbs.
`Eid is also part of our culture. It is very difficult for people to deviate from traditions. Dressing up children is a big part of Eid festivities. No parent would like to deprive their kids of the small nuggets of happiness on Eid. They will do all in their power to buy stuff at least for the little ones.
Dr Nadeem Javed, former chief economist of the Planning Commission, drew attention to the rural population. He also believes that the dip in the Eid economy should be in the vicinity of 30pc at most. `I had to travel back and forth for personal reasons during the past few weeks. For a better part of my travel, life was closer to normal beyond big cities. There were some restrictions on congregations, but townspeople in closely knitted communities find ways to carry on with traditions. If a shop is closed, the tailor or cloth merchant can be called home,` he said over the phone from Muzaffargarh.
He also mentioned massive cash transfers to the poor under government schemes and private philanthropic initiatives over the past few weeks. Such transfers run in billions. `Poor, cash-starved people tend not to save. All of these transfers must have already been used. Close to Eid, it will not be absurd to assume that some of it must have been spent on Eid-related shopping, he said.
Another market watcher shared astonishing details of online shopping activity that soared through the roof during the lockdown. He mentioned one foreign upscale brand that booked orders worth Rs1bn in Ramazan.
It is hard to verify claims and projections in the absence of a systematic set of relevant data of a predominantly cash-based activity. Still to get a sense of the quantum of the Eid economy in Pakistan, this writer has historically been relying on the data of new notes presumably for Eidi, remittances and cash withdrawals from banks in Ramazan as key pointers.
This year, however, the State Bank of Pakistan (SBP) did not issue new currency notes. The finance division stated that remittances were increasing marginally despite the pandemic, but the cash withdrawal situation was clouded because of the funds flowing into banks to finance multiple Covid-19-inspired schemes.
`In 2019, the SBP issued Rs350bn fresh currency notes for Eid. But this year, notes were already issued in April to contain the spread of the virus through soiled bills.
Besides, the central bank wished to endorse the government`s message of caution and keep the public from flocking the minimally staffed banks for fresh notes, a banker told Dawn privately.
Normally, remittance inflows double in Ramazan. Last year, it was about $3.4bn against the monthly average of $1.7bn. It is presumed that a big portion of additional funds is directed towards Eid spending.
The 2020 Ramazan data will come with a lag, but there is an expectation of some spike. The World Bank though has projected 23pc fall in remittance this year in Pakistan.
Banking sources expect remittance inflows in the vicinity of $2bn in 2020. The National Accounts Committee last week authenticated provisional data showing a 6pc annual increase in remittances in 2019-20.