US credit rating Fitch Solutions warned the impacts of second wave of Coronavirus upon Pakistan economy
*US credit rating agency, Fitch Solutions has warned that the second wave of COVID-19 will deteriorate refining, fuel demand growth outlooks for Pakistan.*
Fitch Solutions in its latest report said that a sharp resurgence in new daily Covid-19 infections in Pakistan has put the brakes on the government’s economic reopening plans after earlier lockdowns.
The report said that the latest surge places Pakistan among the most affected countries in the Asia-Pacific in terms of case load, and one of five of Asia’s largest fuel markets – others being Indonesia, Japan, Malaysia and South Korea – wherein the number of new infections is rising again after attempted re-openings.
The report said that the economic fallout for Pakistan could prove to be severe and much greater than anticipated, as pressure on the domestic healthcare system mounts. In particular, the lack of Covid-19 testing kits and hospital beds could turn out to be critical, resulting in more severe build up in cases.
The report pointed out that Pakistan’s extended fight against Covid-19 triggers larger downside revisions to its earlier 2020 downstream forecasts. “Pakistan’s refining output is now due to see a larger contraction of -25% in 2020, down from -16% forecast prior, as current trends of refinery shutdowns and below-optimal run rates look set to be extended,” Fitch Solutions said.
The nascent rebound in fuel demand also looks set to hit a roadblock, and remain depressed for longer, as curbs on movement and business operations – which had devolved to ‘micro-cluster’ lockdowns in small localities, risk being re-introduced and expanded.
“A -20% decline for the full year is now forecast, down from the previous forecast of -13%. This adds to a growing list of woes for Pakistan’s refiners, many of whom are already struggling to keep afloat due to chronic inefficiencies, inability to match tightening domestic fuel regulations and rising competition from higher quality, competitively-priced imports. A meaningful rebound in domestic fuel demand thus may not manifest before 2022, by which we anticipate infections to slow and working Covid-19 vaccines to be made available,” the report added.