#Coronavirus impact: Pakistan saw highest inflation in world during 2020

With the emergence of the coronavirus pandemic, the entire economic scenario was turned upside down. For Pakistans residents, the fiscal year 2020 was the worst year as they witnessed highest inflation in the world forcing policymakers to increase the interest rate, according to the State Bank of Pakistan (SBP).

"Pakistan witnessed the highest inflation not only in comparison with the developed economies but also with emerging economies," said the Inflation Monitor for April issued by the SBP on Saturday.

The SBP pushed up interest rates to cool down the inflationary pressure during the fiscal year but high rates proved counterproductive as they further increased inflation while the private sector stopped borrowing costly money hampering industrial growth and services, reports Dawn news.

January witnessed 12-year high inflation at 14.6 percent. In response to the rising prices, the SBP rose the interest rates to 13.25 percent.

However, with the emergence of the coronavirus pandemic, the entire economic scenario was turned upside down as demand contraction lowered inflation forcing the SBP to cut down interest rates to 5.25 percent within just three months.

The rate cut announcement came as inflation slowed down, falling to 8.2 percent in May, much lower than the SBP projections for the month.

The July-May inflation for the current fiscal year slipped below to the State Bank's earlier projection of 11 percent to 10.94 percent. The number is expected to drop further in June.

The government has slashed petroleum prices thrice during the two months, which drastically reduced the cost of production, transportation, and finally reduced inflation. The SBP has provided relief amounting to hundreds of billions in the form of principal payments deferrals, debts rescheduling, and lending on easier terms for the industrial sector to avoid massive layoffs. https://www.khaleejtimes.com/coronavirus-pandemic/coronavirus-what-are-working-mums-concerned-about-as-dubai-offices-return-to-100--