Pakistan's deadly floods cause economic damages worth $12bn; inflation likely to reach 30%

As deadly floods wreaked havoc in Pakistan, flood-related economic damage to the nation now stands at $12.5 billion up from the previous $10 billion. According to a Geo News report, following the disaster, inflation is expected to increase to a range of 24% to 27% and reach 30% for the current financial year. Furthermore, on August 29, the Planning Minister of Pakistan, Ahsan Iqbal revealed that the devastating floods have cost damages totalling more than $10 billion.  

In addition to this, from 21.9% to over 36%, poverty, as well as unemployment, will increase significantly. According to estimates from the Pakistani government, after flooding in 118 districts, 37% of the population has been affected by poverty. 

A significant committee that included representatives from the ministries of finance, planning, the state bank of Pakistan, the FBR, PIDE, and other organisations found that unemployment and poverty had increased significantly, going from 21.9% to more than 36%. Although there has been a large increase in unemployment, the administration has opted to publish any figures after consulting with the appropriate parties. 

Pakistan floods aggravate the financial crisis in Pakistan

Apart from this, prior to the recent devastating floods, the unemployment rate was 6%. According to official sources, the GDP growth for the current fiscal year would be lowered from 5% to 2%. Moreover, the State Bank of Pakistan said that growth will be lowered from 4% to 4.5% to 2% for the current fiscal year, The News reported. Following the flooding, the impact on agriculture growth was considerably more severe. Both the services sector and the aim for agricultural expansion were severely impacted. 

According to a Geo News report, the country's GDP growth is expected to fall by 3% and would be hovering around 2% of GDP on the eve of the budget for 2022–23, down from the earlier anticipated growth rate objective of 5%. 

On Saturday, Pakistan urged the global community to provide an "immense humanitarian response" to the catastrophic floods, which have so far claimed the lives of at least 1,265 people. Ahsan Iqbal, the minister of federal planning, demanded an "immense humanitarian response for 33 million people" impacted by the monsoon rains that caused the deadly floods. 

It is worth mentioning that over 1 million houses have been destroyed by the floods, which have impacted millions of people. Last week, the United Nations and Pakistan jointly announced an appeal for $160 million in emergency funds to assist those affected. According to media reports, the International Monetary Fund (IMF) provided another lifeline on August 29 by granting $1.17 billion in bailout funds as Pakistan struggles with political and economic instability that has been made worse by the disastrous floods. 

(Image: AP)