COPING STRATEGY

MITIGATING ADVERSE IMPACT OF

COVID-19 ON THE ECONOMY & JOB
MARKET IN KHYBER PAKHTUNKHWA

Planning and Development Department

Government of Khyber Pakhtunkhwa
COPING STRATEGY
MITIGATING ADVERSE IMPACT OF
COVID-19 ON THE ECONOMY & JOB
MARKET IN KHYBER PAKHTUNKHWA

Planning and Development Department

Government of Khyber Pakhtunkhwa
Table of Contents
1. EXECUTIVE NOTES 1

2. INTRODUCTION 3

3. SECTOR ANALYSIS 4

4. MITIGATION STRATEGY 6

5. RESPONSE MECHANISM 10

6. EFFECTS OF COVID-19 ON THE 13

ECONOMY OF KHYBER PAKHTUNKHWA
1. EXECUTIVE NOTES
The act of social distancing and steps taken to ensure its success requires minimizing the short-
term economic impact on the active labour force. In addition to mitigating the adverse effects,
sustaining vital economic operations is also a necessity to ensure success of lockdowns and
restrictions. Otherwise, incentives to break through will increase. The mitigation strategy is an
immediate response based on early assessment. It will be further developed and calibrated to
mitigate the economic effects and minimize adverse effects on people’s wellbeing.

Support to Vital Economic Operations will be carried out to

1. Maintain supply chain of essential commodities through policy interventions and
administrative actions.
2. Sustain disposable incomes of households when faced with loss of employment or curtailed
business activity.
3. Sustain aggregate demand through income supplements to keep essential businesses
producing and supplying essential commodities.
4. Continue safe operations for jobs and incomes in limited cases.

Mechanisms of the Mitigation Strategy

The following mechanisms will be implemented to achieve the vital operations running and these
will be calibrated across sectors and areas according to data driven analytics:
1. Income support through enhanced scope of Benazir Income Support Programme (BISP) and
provincial top up to 1.5 million people.
2. Khyber Pakhtunkhwa short-term safety-net program, administered through Village Council/
Neighbourhood Council based committees to 350,000 affectees of current crisis.
3. Liquidity easement to private sector pegged to keeping optimal levels of employment (debt
deferment or a 3-month moratorium).
4. Income support to small shops (microenterprises) affected by mandatory closures through
municipalities.
5. Advance salary payments to BPS 1-17, to sustain demand, if assessed to be critical.
6. General support through deferred utility bills applicable to small consumers.

Keeping in view the higher vulnerability of daily wage workers, paid worker by piece rate or work
performed, paid non-family apprentice and street vendors, the mitigation strategy is focusing
immediately on these four labour categories. Their numbers estimated from the Labour Force
Survey, 2018 for Khyber Pakhtunkhwa are given in the following table:

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 Expected Layoffs of Highly Vulnerable by Employment Type (Khyber Pakhtunkhwa)

Immediate Moderate Stringent

Vulnerable categories Employment effect restrictions restrictions
of employed (in millions)
(Loss of employment in millions)

Daily wage workers 3.04 0.30 1.52 1.82

Paid worker by piece rate
1.40 0.14 0.70 0.84
or work performed
Paid non-family apprentice 0.07 0.01 0.04 0.05

Street vendors 0.15 0.02 0.07 0.09

Equipment procurement 1.4 1.4 1.4 1.4

Total 0.4665 2.3325 2.7975

Government of Khyber Pakhtunkhwa will be spending funds to minimize the effects of the crisis
on economic activity, livelihoods and people’s wellbeing in the province. These are being set into
motion immediately to prevent any adverse effects. At the same time, to further enhance their
effectiveness and to ensure targeting of initiatives, a data driven approach will be adopted. It will:
1. Create and update on a daily basis, database of key variables of economic activity, stock
positions of essential commodities and status of vital economic operations directed by the
government;
2. Coordinate the implementation of vital economic operations across departments under the
guidance of Additional Chief Secretary and Planning & Development Department to sustain
essential supplies;
3. Track the differential economic effects of the public health crisis on various types of workers,
households and communities through fielding data collection instruments;
4. Continually assess the nature and extent of supply and demand shocks and redirect funds
and operations toward areas of need; and
5. Using data and analytics to continually generate reports to calibrate government’s responses
and mitigation measures and support to vital economic operations.

2
2. INTRODUCTION
The impact of partial and full lockdowns across the province will have bearing over the economic
activity as well as employment. In order to mitigate its negative effects, a mix of administrative
measures, subsidies and economic stimulus decisions are required to be taken. The following
analysis covers all the three areas by doing a sector wise analysis.

2.1. General Statistics

KHYBER PAKHTUNKHWA LABOUR FORCE STATISTICS Employment (in millions)

Years 2017-18

Labour force in million 7.72

Male 6.45

Female 1.27

Employed 7.17

Male 6.01

Female 1.16

Unemployment rate (%) 7.2

Male 6.8

Female 9

2.2. Labour Force Distribution

Sector Labour
Sector Male Female
Share % Force

Agriculture, Livestock, Fisheries, Forestry 32.62 2,338,854 1,540,363 798,196

Manufacturing 12.03 862,551 706,776 155,440

Construction 13.74 985,158 979,630 5,684

Wholesale 15.12 1,084,104 1,069,780 11,484

Transportation and Storage 10.19 730,623 715,190 3,596

Community / Social / Government 13.45 964,365 808,345 156,020

Hotels and Restaurants 1.62 116,154 108,180 3,596

Others 1.23 88,191 73,022 15,080

Total 100 7,170,000 6,001,286 1,149,096

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 3. SECTOR ANALYSIS
3.1. Agriculture
It employs 32.62% of the total labour force or 2.34 million persons, which is less than the national
average. 1.5 million male and 0.79 million females are employed in this sector. It appears that
most of the females employed in the sector are part-time employees who also perform other
household chores. This sector is so far largely unaffected because of its nature and the fact that a
predominant majority does not travel to their workplace. The only area of immediate concern will
be if farmers are not able to take their produce to the commodity markets.

3.2. Manufacturing
This sector engages 12.03% or 0.862 million persons. There are 0.71 million males and 0.155
million females in this sector. Immediate layoff (30-45) days is a distant possibility since most of
these workers are skilled and work on monthly salaries. Since most of the people travel to their
workplaces, therefore, the sector will witness a slowdown in general. However, if industries related
with essential food commodities as well as some selected categories are kept open, then the
impact will be less severe. This sector will abruptly show signs of deterioration in the medium
term (beyond 45 days) when owners and firms will start laying off employees.

3.3. Construction
The sector employs 13.74% of the labour force, which is almost double the national average. Total
size of the labour force is 0.99 million and almost all are males. This is one of the worst hit sectors
because of nature of job and activity. The sector relies on inputs from various other industries and
most of the labour employed is daily wage and low paid. Lockdown will affect almost the entire
sector.

3.4. Wholesale
This is the second largest sector after agriculture and employs 15.12% of the labour force in the
province. It translates into 1.084 million workers of which 1.06 are males and 0.11 million are
females. This sector will also be affected since most of the shops of non-essential items are closed
and, more importantly, people will not be able to do their shopping because of the lockdown.
Although exact numbers are not known, but one can safely assume that almost 50% of this sector
is daily wager putting this as a high-risk sector in term of job loss and economic slowdown.

3.5. Transport and Storage

This sector employs 10.19% of the total workforce, with 0.61 million males and 0.03 million females.
Although freight and commodities shall be kept running, inter and intra provincial stoppage of
public transport will impact employment. Majority of the workers in this sector are a type of daily
wagers, even if self-employed, since their earning entirely depends on the running wheel.

4
3.6. Community / Social / Government
This sector employs 13.45% of the workforce in the province which is 0.964 million persons. Out of
this, 0.791 million are males and 0.171 million are females. This is perhaps the only sector that will
not see any adverse impact because of the safety nets and assured salaries.

3.7. Hotels / Restaurants

With 1.62% share or 0.17 million workers, this is the worst affected sector where the entire
workforce is rendered unemployed currently. A significant portion of this sector is also daily wage.

3.8. Others
This sector includes sectors like banking, finance, insurance, real estate, etc. Its share in the
provincial workforce is 1.23% or 0.09 million people. This sector is also unscathed to a large extent
currently.

5
 4. MITIGATION STRATEGY
In order to offset the adverse impact of lockdown, two areas need to be addressed:
1. Operational essential commodities markets.
2. Support to the workforce that is jobless and has no sources of livelihoods

An analysis of sectors along with an assumed impact and coping strategy is given below. The
analysis is given on the assumption that the lockdown will continue for 45 days. Number of job
losses in medium (up to 6 months) and long term (6-12 month) is provided at the end of this
chapter.

4.1. Job loss impact on each sector - short term (45 days lockdown)
Sector Labour Impact Impact Total Impact
Sector Male Female
Share % Force Male Female Job Loss %
Agriculture,
Livestock,
32.62 2,338,854 1,540,363 798,196 77,018 39,909.80 116,927 5
Fisheries,
Forestry
Manufacturing 12.03 862,551 706,776 155,440 212,033 46,632.00 258,664 30

Construction 13.74 985,158 979,630 5,684 293,889 1,705.20 295,594 30

Wholesale 15.12 1,084,104 1,069,780 11,484 213,956 2,296.80 216,252 20

Transportation
10.19 730,623 715,190 3,596 357,595 1,798 359,393 50
and Storage
Community
/ Social / 13.45 964,365 808,345 156,020 - - - -
Government
Hotels and
1.62 116,154 108,180 3,596 54,090 1,798.0 55,888 50
Restaurants
Others 1.23 88,191 73,022 15,080 - - - -

Total 100 7,170,000 6,001,286 1,149,096 1,208,581 94,140 1,302,720

4.1.1. Agriculture
Based on the analysis above, it is assumed that job loss in this sector will be insignificant. At 5% job
loss, the total is 116,927. Even this could be mitigated through a few steps. In this regard, the Task
Force constituted for the purpose has notified the following measures to mitigate agricultural job
losses, which will also contribute to ensuring food security.
1. Keep the fruit and vegetables markets open (Local Government & Rural Development
Department, District Administration).
2. Keep meat shops open (Director General Livestock, District Administration).
3. Keep grain markets operational for the essential commodities (Food Department, District
Administration).

6
4. Keep milk shops open (Director General Livestock, District Administration).
5. Keep the “Kissan Markets” open (Agriculture Department, District Administration).
6. Keep the online markets in three districts operational, upscale and expand to other districts,
at least to the divisional headquarters (Agriculture Department).
7. Assign responsibilities to Farms Services Centres for keeping stocks, reporting surpluses as
well as deficiencies in the district (Agriculture Department).
8. Keep a stock of freight vehicles and make them available to lift surpluses and take it to
deficient places and markets (Transport Department, District Transport Authorities, District
Administration).
9. Keep a stock of all essential commodities in the districts to sort out availability and sufficiency
(District Food Controller, District Administration).
10. A district level committee already notified shall coordinate all the above steps
11. The Task Force shall do the same at the provincial level.
12. Performance Management & Reforms Unit (PMRU) to get data on daily basis and devise a
reporting format to enable quick decision-making.

List of essential items includes the following items

1. Pulses (Gram, Mash, Masoor, Moong) 6. Wheat

2. Tomato 7. Edible Oil

3. Onion 8. Meat

4. Potato 9. Sugar

5. Rice 10. Milk

A committee has been notified to monitor the supply chain of essential

commodities with the following terms of reference

1. Deputy Commissioner Chairperson

2. District Director Agriculture Extension Member
3. Assistant Director Consumer Protection Council Member
4. Representative of Khyber Pakhtunkhwa Food Safety & Halal Food Authority Member
5. Secretary Market Committee / Head of All Trades Association Member
6. Secretary Transport Member
7. Superintendent Police / Deputy Superintendent Police Headquarters Member
8. District Food Controller Secretary

Terms of Reference (TORs):

1. Assessment of demand and mapping of local production of the listed items.
2. Liaison with Commission Agents for ensuring uninterrupted supplies.
3. Stocktaking through verification of go-downs, warehouses and cold storages.

7
 4. Strengthening and management of supply chains through contacts with supply sources and
the suppliers.
5. Prevention of hoarding of foodstuff.
6. Coordination with other districts in case of shortages of the listed items.

With such steps, there is little possibility of food shortages as well as job losses in this sector. It is
assumed that the vulnerable segment will already be covered under the Ehsass Program and very
few left outs can be identified through the district identification mechanism.

4.1.2. Manufacturing
Since this sector is one of the few formal sectors, therefore, it is assumed that layoffs will not be
significant in the immediate future (30-45 days). A large portion of jobless people shall be taken
care of under the Ehsaas Program and district identification mechanism. Expected job loss in this
sector is 258,664. Following steps are however important:
1. Keep the important industrial units operational, such as edible oil, four mills, pharmaceutical,
etc. (Industries Department, Labour Department).
2. Keep a stock of essential commodities availability in Utility Stores across the province
(Industries Department).
3. Keep a stock of all manufactured essential commodities in the province (IndustriesDepartment).

4.1.3. Construction
The sector will go-slow because of lockdowns and expected job loss in this sector is 295,594.
While there is no mechanism available for this sector to continue functioning, certain tax breaks
will enable the employers to sustain their workforce till the lockdown ends. At the same time,
since most of the workforce is daily wage, it is assumed that a significant portion will already be
included in the Ehsaas database. Rest of the workforce that has lost their jobs will be covered
through the district identification mechanism.

4.1.4. Construction
With a perceived impact of around 20%, the jobs loss in this sector would be around 216,252.
Assuming that some will be covered under the Ehsaas Program, rest of the workforce that has
now come down below the poverty threshold shall be covered under the district identification
mechanism. By keeping the essential commodities shops open, there will be some absorption of
the shock.

4.1.5. Transport and Storage

Total job loss in this sector is projected to be 357,595. Keeping the freight operation open will
absorb some of the negative impacts. Still this sector is one of the major casualties in terms of
numbers. Assuming that some portion of the workforce will have some savings (owners of the
vehicles, drivers, etc.), people who temporarily lost their jobs will have to be identified either
through Ehsaas or district identification mechanism.

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4.1.6. Hotels and Restaurants
Job loss in the sector is projected to be around 55,888. Most of these will be daily wagers, barring
a few large food chains and franchise restaurants. There is no administrative measure available to
offset the adverse impact. However, safety nets and tax exemptions could be the two tools to help
mitigate the crisis in this sector.

4.2. Job loss impact on each sector - medium term (45 days to 6 months)
Sector Labour Impact Impact Total Job
Sector Male Female Impact
Share % Force Male Female Loss
Agriculture,
Livestock,
32.62 2,338,854 1,540,363 798,196 308,072 159,639 20% 467,711
Fisheries,
Forestry
Manufacturing 12.03 862,551 706,776 155,440 353,388 77,720 50% 431,108

Construction 13.74 985,158 979,630 5,684 587,778 3,410 60% 591,188

Wholesale 15.12 1,084,104 1,069,780 11,484 534,890 5,742 50% 540,632

Transportation
8.35 598,695 739,230 2,204 554,422. 1,653 75% 556,075
and Storage
Community
/ Social / 13.45 964,365 791,517 171,912 39,575 8,595 5% 48,171
Government
Hotels and
1.62 116,154 78,130 3,712 58,597 2,784 75% 61,381
Restaurants
Others 3.07 220,119 189,916 15,776 9,495 788 5% 10,284

Total 100 7,170,000 6,095,342 1,164,408 2,446,220 260,333 2,706,553

4.3. Job loss impact on each sector - LONG term (6 months TO 12 MONTHS)
Sector Labour Impact Impact Total
Sector Male Female Impact
Share % Force Male Female Job Loss
Agriculture,
Livestock,
32.62 2,338,854 1,540,363 798,196 616,145.20 319,278.40 40% 935,423
Fisheries,
Forestry
Manufacturing 12.03 862,551 706,776 155,440 459,404.40 101,036.00 65% 560,440

Construction 13.74 985,158 979,630 5,684 783,704.00 4,547.20 80% 788,251

Wholesale 15.12 1,084,104 1,069,780 11,484 855,824.0 9,187.20 80% 865,011

Transportation
8.35 598,695 739,230 2,204 628,346 1,873 85% 630,218
and Storage
Community
/ Social / 13.45 964,365 791,517 171,912 277,031 60,169.20 35% 337,200
Government
Hotels and
1.62 116,154 78,130 3,712 70,317.0 3,340.8 90% 73,657
Restaurants
Others 3.07 220,119 189,916 15,776 37,983.2 3,155.2 20% 41,138

Total 100 7,170,000 6,095,342 1,164,408 3,728,754 502,587 4,231,341

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 5. RESPONSE MECHANISM
The Government of Khyber Pakhtunkhwa has the following options apart from the administrative
measures discussed above:
1. Top-ups to the Benazir Income Support Program beneficiaries through Ehsaas Program.
2. An additional short-term safety net program through district identification mechanism.
3. Tax breaks to certain industries.
4. Loans rollover and delayed payments of interests on loans.
5. Deferred payments of utilities for small consumers.

5.1. Ehsaas Program

Currently, there are approximately one million Ehsaas Program beneficiaries in Khyber
Pakhtunkhwa, which means around 8.1 million people (estimating a household size of 8.1). The
Federal Government is increasing the total pool of beneficiaries in Pakistan to 5.5 million recipients.
Approximately, 0.66 million of these additional beneficiaries will be from Khyber Pakhtunkhwa,
raising the total number of beneficiaries of Khyber Pakhtunkhwa to approximately 1.5 million.

Since the Federal Government is contemplating a top-up to the existing beneficiaries through its
Ehsaas Program, the Government of Khyber Pakhtunkhwa could also consider providing resources
for a further top-up. If an additional relief of Rs. 2,000 per beneficiary per month is provided, then
the total for 3 months will come to Rs. 9 billion. The support could be concluded earlier if the crisis
ends before that time.

5.2. Short Term Safety Net Program through

District Identification Mechanism
There is an apprehension that an abrupt stoppage of businesses and economic activities will
render even those workers who will not be falling within Ehsaas’ poverty threshold. This is the
group, which is the most vulnerable and at the same time obscure and difficult to identify. Once
Ehsaas raises its threshold of Proxy Means Testing to a higher level, there is a possibility that some
portion of this segment will find its way into the beneficiary list.

However not all will still be included for one reason or the other. This initiative will require better
targeting based on local knowledge. Therefore, there is a need to quickly identify such people
and these are provided support in cash or in kind through the district administration. It could be
safely assumed that out of the total of 1.3 million persons rendered unemployed, almost 550,000
to 600,000 persons will be from this category. Some of the caveats that could also be termed as an
exclusion / inclusion criterion would be:
1. A committee at the Village Council/Neighbourhood Council level will identify the vulnerable
families. This committee will comprise of the Secretary of the Council, Patwari, a School Teacher
(preferably high school) and three notables of the area. The committee will be notified by the
respective district administration of each area. Ideally, the beneficiaries that the committee
identifies should not exceed beyond 2% of the total population of the council. The number
could however be less then 2% of the population if there are no eligible families.

10
2. The identified persons should not be beneficiaries of Ehsaas Program, a government servant,
employed in formal sector with monthly income, landowner, or having means to sustain
himself / herself even if unemployed for a few months.
3. The identified persons should preferably be daily wage workers and heads of their respective
households or sole bread earners.
4. Data shall be collected at the district level in electronic format. Format to be provided by
Poverty Alleviation and Social Security Division (PASSD). Once the data collection application
is provided by PASSD, the same data manually collected by the team on field may be entered
in the application at the district headquarter level. Deputy Commissioners shall ensure
availability of sufficient numbers of Data Entry Operators for the timely completion of the
task. Management Information System (MIS) shall be maintained at the district level as well as
at the provincial level. Performance Management & Reforms Unit will coordinate with Benazir
Income Support Programme to maintain this data at the provincial level.
5. 10% of the data will be cross verified by Tehsildar or any other officer deputed by the Deputy
Commissioner in this regard. A focal person shall be identified by the Deputy Commissioner
to supervise day-to-day affairs. Suggested officers are Additional Deputy Commissioner
Finance & Planning or any other officer deputed for the purpose.

The required data once complied with be handed over to Poverty Alleviation and Social Security
Division to run it against its system. National Database & Registration Authority and Telecom
Companies will also run it against their database to remove the ineligible persons. Criteria for
removal will be the same that Ehsaas Program used for cleaning its own list of beneficiaries. The
final list approved by the Government of Khyber Pakhtunkhwa will be shared with Ehsaas Program
for payment to the beneficiaries through its own existing mechanism.

A sum of Rs. 6,000 will be provided to the newly identified deserving persons. The total cost will
then add up to Rs. 6.3 billion for the short-term safety net program. This support could be ended
earlier if the crisis ends earlier. Federal Government will also provide a sum of Rs. 12,000 to this
category. Provincial support to all the three categories amounting to Rs. 13.1 billion shall be
provided in the 2nd Phase.

5.3. Tax Exemptions

Certain sectors could be provided tax exemption to keep these afloat during the crisis period.
Potential candidates are construction sector by reducing or waiving off capital value tax / mutation,
stamp duty, etc. Other sectors including wholesale and retail may be facilitated by reducing sales
tax on services and urban immovable property tax. Transport sector could be facilitated through
reduction in sales tax on services. Total impact of this is not known so far but it is expected that a
total of Rs. 5 billion impact will be borne by the province.

5.4. Loans Rollover and Delayed Payments of

Installments on Loans
Many of the small and large businesses rely on running finances from commercial banks or these
have taken loans as capital injection into their businesses. If the banks can either rollover or delay
the installments by 3 months, many sectors will get a breathing space. The government will
take up a debt payment moratorium for 3 months to allow business higher liquidity to the most
affected small and medium enterprises. Major beneficiaries will be agriculture, manufacturing,
wholesale, construction and transport sectors. Bank of Khyber can do it on the instruction of the

11
 Government of Khyber Pakhtunkhwa. For other Banks, a request to the Federal Government will
be made so that the State Bank of Pakistan is approached for that purpose. Some of the outlines
of this approach are as under:
1. For working capital loans (a) expiry of loans falling due before 30 June, 2020 is to be extended
by 3 months and (b) mark-up due for the quarter ending 31 March, 2020 is to be paid by 15
June, 2020 instead of 15 April, 2020.
2. In respect of long-term facilities where repayment is made through instalments, the following
is proposed as a reprieve:
3. Where repayment is based on monthly instalments, monthly instalments falling due in the
months of March (if unpaid to date), April and May 2020 should be deferred for a period of 3
months from the date of respective payment date of each instalment.
4. Where repayment is based on quarterly or half yearly instalments, one instalment falling due
during the months of March, April and May 2020 should be deferred for a period of 3 months
from actual payment date.
5. Mark-up / profit for the period as mentioned above will be payable by the borrowers before
15 June, 2020. The government may be willing to take this as a major relief to them.
6. Payment schedule will be revised by bank in line with the above.

Overall summary of the response is given in the table below

@ Cost / month Total Cost

Category Beneficiaries #
Rs. Billion (Rs.) Billion (Rs.)

Ehsaas existing 966,000 2,000 1.932 5.796

Ehsaas National Socio-Economic
566,000 2,000 1.132 3.396
Registry
Identifications by District
583,000 2,000 1.166 3.498
Administration / Committees
Tax breaks 900,000 Item based 1.6 5
Loans roll over, delayed payments
- 0.5 1.5
(Bank of Khyber only)
Provincial Disaster Management
Authority (not covered in this 6
strategy)
Health (not covered in this strategy) 8

Total 6.33 33.19

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6. EFFECTS OF COVID-19 ON THE
ECONOMY OF KHYBER PAKHTUNKHWA
It is understood that the threat of COVID-19 may be impacting production of several sectors of
the economy resulting in huge unemployment. At the same time, it is yet not known as to how
long the public health emergency will last. Continuity in these uncertain times is making things
even more challenging. The COVID-19 pandemic has affected the economy of Pakistan as well as
of Khyber Pakhtunkhwa. This effect on the provincial economy is estimated in the context of Gross
Domestic Product of Khyber Pakhtunkhwa.

For forecasting purpose, it is assumed that the economy of Khyber Pakhtunkhwa was growing
with the rate of previous year at 3.73 percent. In that case, the estimated Gross Domestic Product
was Rs. 13,35,942 million. After the COVID-19 pandemic, the economy is likely to grow at a pace
of 2.19 percent and is forecasted at Rs. 13,16,160 million. Resultantly, the loss that the economy is
facing due to this disaster is calculated at Rs. 19,782 million. This is 2 percent of the Gross Domestic
Product forecasted with the previous year growth rate. The effect of this pandemic is given below
on different sectors.

6.1. Agriculture Sector

Main contributors of agriculture are livestock and crops, which constitute around 98 per cent to
the agriculture sector economy in Khyber Pakhtunkhwa. The effect of this pandemic on agriculture
will be negligible as the crops around the province are near harvesting. In the next 4-6 weeks, the
harvesting of crops will start. As 32 per cent of labour force is engaged in agriculture, this sector
is over populated so the effect on production will be minimum. The major sector that will be
affected from this pandemic will be livestock. There are two reasons of the effect of pandemic on
livestock including the reluctance of population towards the use of livestock and dairy products
(specially meat and milk) and the substantially decreased use of livestock products due to the
lockdown situation across the province.

6.2. Industries Sector

The main contributors to industries sector are manufacturing and construction. With the
lockdown across the province, the manufacturing sector has been shutdown by the government,
which means either no production at all or negligible level of production. The reason is that the
manufacturing sector in Pakistan in general and Khyber Pakhtunkhwa in particular is labour
intensive.

6.3. Services Sector

With almost 60 per cent contribution to the Gross Domestic Product of Khyber Pakhtunkhwa, this
sector is the major contributor. Almost 37 percent of the labour force is engaged in this sector. All
the commercial plazas, shopping malls, wholesale dealers, financial institutions and non-financial
entities have been closed. Moreover, the services provided by people are also closed with this
lockdown across the globe.

13
 The effect of this pandemic will be seen in terms of inflation as the production processes have
either seized or decreased. Resultantly, the prices will boost and demand-pull inflation will occur
in this period. In real terms, the effect on Gross Domestic Product is almost Rs. 20 billion, but in
nominal terms, this could cost up to Rs. 60 billion. The effect of COVID-19 is shown in the tables
given below:

Forecasted Forecasted
Real Gross Gross Value Actual Assumed Assumed on Assumed
Domestic Added (GDP) Growth Gross Value Growth Growth Rate
Product on Actual rate Added rate Contribution of
Growth Rate sectors to GDP
2019-20 2019-20
Particulars 2018-19 (P) 2019-20 (F) 2018-19 (P) 2019-20 (Forecast)
(Forecast) (Forecast)
Gross Value
Add of
235,773.98 241,998.41 2.64% 241,180.24 2.29% 18.32%
Agriculture
Sector
Gross Value
Add of
293,693.53 290,697.86 -1.02% 290,012.07 -1.25% 22.03%
Industries
Sector
Gross Value
Add of 758,435.96 804,361.80 6.06% 784,967.59 3.50% 59.64%
Services Sector
GDP of Khyber
1,287,903.47 1,335,942.27 3.73% 1,316,159.91 2.19% 100.00%
Pakhtunkhwa

Effect of COVID-19 on the Gross Domestic Product of

Khyber Pakhtunkhwa in the fiscal year 2019-20 (GDP Table)

Forecasted Forecasted
Real
Gross Value Actual Assumed Assumed on Assumed
Gross
Added (GDP) Growth Gross Value Growth Growth Rate
Domestic
on Actual rate Added rate Contribution of
Product
Growth Rate sectors to GDP
2018-19 2018-19 2019-20
S# Description 2019-20 (F) 2019-20 (F) 2019-20 (F)
(P) (P) (F)

A AGRICULTURE SECTOR

1 Crops 44,179.80 43,048.80 -2.56% 43,035.85 -2.59% 3.27%

Major Crops 28,232.70 27,230.44 -3.55% 27,216.32 -3.60% 2.07%

Minor Crops 15,947.10 15,822.71 -0.78% 15,819.52 -0.80% 1.20%

Livestock &
2 187,969.40 194,585.92 3.52% 193,326.53 2.85% 14.69%
Poultry
3 Fisheries 598.49 561.09 -6.25% 560.79 -6.30% 0.04%

4 Forestry 3,026.29 4,257.08 40.67% 4,257.08 40.67% 0.32%

14
 Forecasted Forecasted
Real
Gross Value Actual Assumed Assumed on Assumed
Gross
Added (GDP) Growth Gross Value Growth Growth Rate
Domestic
on Actual rate Added rate Contribution of
Product
Growth Rate sectors to GDP
Gross Value
Added of
5 235,773.98 241,998.41 2.64% 241,180.24 2.29% 18.32%
Agriculture
Sector
B INDUSTRIES SECTOR
Mining &
6 86,062.33 89,771.61 4.31% 89,676.94 4.20% 6.81%
Quarrying
7 Manufacturing 129,112.92 127,666.86 -1.12% 126,509.74 -2.02% 9.61%
Large Scale
93,622.26 90,017.81 -3.85% 88,941.15 -5.00% 6.76%
Manufacturing
Small Scale
25,759.60 27,871.88 8.20% 27,691.57 7.50% 2.10%
Manufacturing
Slaughtering 9,731.06 10,068.73 3.47% 9,877.03 1.50% 0.75%

8 Construction 58,274.15 53,862.80 -7.57% 53,320.85 -8.50% 4.05%

Electricity and
9 20,244.13 19,893.91 -1.73% 20,504.54 1.29% 1.56%
Gas
Electricity
Generation & 17,220.09 16,402.13 -4.75% 16,875.69 -2.00% 1.28%
Distribution
10 Gas Distribution 3,024.04 3,631.57 20.09% 3,628.85 20.00% 0.28%
Gross Value
Added of
11 293,693.53 290,697.86 -1.02% 290,012.07 -1.25% 22.03%
Industries
Sector
C SERVICES SECTOR
Whole Sale
Trade & Retail
12 349,805.28 376,117.90 7.52% 363,097.88 3.80% 27.59%
and Hotels &
Restaurants
Transport
13 Storage and 124,606.25 128,849.70 3.41% 127,721.41 2.50% 9.70%
Communication
Finance &
14 32,933.89 36,015.79 9.36% 34,481.79 4.70% 2.62%
Insurance
15 Housing 40,836.46 41,086.30 0.61% 41,081.48 0.60% 3.12%
General
16 101,167.12 109,250.43 7.99% 106,225.47 5.00% 8.07%
Government
Other Private
17 109,086.96 113,429.61 3.98% 112,359.57 3.00% 8.54%
Services
Gross Value
18 Added of 758,435.96 804,361.80 6.06% 784,967.59 3.50% 59.64%
Services Sector

15
WE DON’T GROW WHEN THINGS ARE EASY.
WE GROW WHEN WE FACE CHALLENGES.

Planning and Development Department

Government of Khyber Pakhtunkhwa