*US credit rating agency, Fitch Solutions has warned that the second waveof COVID-19 will deteriorate refining, fuel demand growth outlooks forPakistan.*

Fitch Solutions in its latest report said that a sharp resurgence in newdaily Covid-19 infections in Pakistan has put the brakes on thegovernment’s economic reopening plans after earlier lockdowns.

The report said that the latest surge places Pakistan among the mostaffected countries in the Asia-Pacific in terms of case load, and one offive of Asia’s largest fuel markets – others being Indonesia, Japan,Malaysia and South Korea – wherein the number of new infections is risingagain after attempted re-openings.

The report said that the economic fallout for Pakistan could prove to besevere and much greater than anticipated, as pressure on the domestichealthcare system mounts. In particular, the lack of Covid-19 testing kitsand hospital beds could turn out to be critical, resulting in more severebuild up in cases.

The report pointed out that Pakistan’s extended fight against Covid-19triggers larger downside revisions to its earlier 2020 downstreamforecasts. “Pakistan’s refining output is now due to see a largercontraction of -25% in 2020, down from -16% forecast prior, as currenttrends of refinery shutdowns and below-optimal run rates look set to beextended,” Fitch Solutions said.

The nascent rebound in fuel demand also looks set to hit a roadblock, andremain depressed for longer, as curbs on movement and business operations –which had devolved to ‘micro-cluster’ lockdowns in small localities, riskbeing re-introduced and expanded.

“A -20% decline for the full year is now forecast, down from the previousforecast of -13%. This adds to a growing list of woes for Pakistan’srefiners, many of whom are already struggling to keep afloat due to chronicinefficiencies, inability to match tightening domestic fuel regulations andrising competition from higher quality, competitively-priced imports. Ameaningful rebound in domestic fuel demand thus may not manifest before2022, by which we anticipate infections to slow and working Covid-19vaccines to be made available,” the report added.