Mobile accessories, artificial jewellery and synthetic fabric are just some of the items that may become more expensive starting next week because of the coronavirus.
Business is expected to go down in Pakistan because of the Wuhan virus as a big chunk of its overall imports are from China.
The virus has reportedly affected over 7,000 people across the world and claimed 170 lives in China.
Originating in China, it has rippled across the world with cases being reported in the United States, Canada, Australia, France and 15 other countries. After China, the second highest number of cases have been reported in Thailand so far.
It hit the Chinese province Hubei back in December and the cases have not stopped surfacing ever since. The virus attacks the respiratory system and causes fatalities if not timely treated.
No case has been reported from Pakistan, but the virus may have grave economic implications for the country.
China is home to over 1.38 billion people, which is a little less than one-fifth of the world’s population. This means it is the world’s biggest consumer and labour market.
“A number of trades in Pakistan will feel the panic growing as their supplies have been constrained,” says Adil, a merchant facilitating local importers with cargoes.
He says it won’t take more than a week till prices of mobile accessories shoot up.
According to a recent report by the Pakistan Bureau of Statistics, the country imported goods worth Rs613 billion in the third quarter of 2019. This is one-fourth of the overall imports in the same time period.
Adil shares that while the Chinese government will most likely lift the restrictions on flights and international travel by the third week of February, it may not be able to resume exports until well into March.
The Chinese government will ease the restrictions on local and international transport when it is certain that the virus has been contained, he said.
“When this rigorous quarantine is over is when production will start there,” he explained, saying that there are a number of merchants who facilitate the imports of 30-40 cargoes and containers each in a month – all of whom have halted their logistical operations since January 22.
He said that the production of export items will need to be realigned once the situation is clear.
Textile is Pakistan’s largest export sector and since the European countries have to bear heavy Duty & Tax Remission (DTRE) when importing from China directly, they reach out to Pakistan to buy the product for them.
“We buy raw yarn from China without having to pay DTRE as the government gives us relief on re-exporting items,” said director level textile industry representative, Abdul Wahid, while talking to SAMAA Digital. He says that as long as industries re-export over 94% of the imported item via a re-exporting agreement, they are not charged DTRE.
“We buy synthetic fabric from China, add value to it and export it to our clients mostly in Europe.” He lamented that the ongoing coronavirus crisis is likely to push off our production and export shipments.
Chinese markets have a global influence as most raw material, services, and even production for electronics manufacturing, automobile assembling and spare parts and synthetic textile is imported from China because the labour cost is low.
Just recently, Apple CEO Tim Cook was quoted as saying that travel bans in China following the deadly virus has stirred uncertainty for his company as all the retailers have been shut.
China is also one of the biggest consumer markets which means that most global businesses that have their stores running in China are losing their revenue each day the markets are closed and till the curfew-like situation is imposed.
Several economists have warned of its GDP conceding a serious hit and the possibility of China not being able to meet its projected target growth rate of 6%.