Political Economy

Oil prices and global economic meltdown amid COVID-19

Once you have hit the rock bottom, the biggest consolation is that you have nowhere to go but up. This is the best way to motivate someone who has touched the bottom in an attempt to rise up. For those who have no intention to avoid the fall will not find the opportunity to come out of the abyss. Amid Coronavirus the world economy is crashing and oil prices are down to a point of no return. Will the world economy rise from its ashes?

The ‘now’ is unthinkable and the past has already gone elusive. The present has become so callous that it has severed all ties of the past and future. The near future seems distant. The post-COVID-19 world will be a different world altogether. As we say the world order is based on economic strength and stability, now we have every reason to believe that it is falling apart. As far as the USA is concerned, oil prices have historically collapsed, storage is full. Wells are being shut down. It is almost game over for the superpower.

Pakistan to slash oil prices in the wake of crashing global oil industry.

For US President Donald Trump shutting down the country to stop the spread of Coronavirus is no less than a nightmare and the same goes for Prime Minister Imran Khan. The fears of a US President killing all economic activity with lockdowns were not unfounded. But his late reaction to deal with the virus resulted in the loss of thousands of human lives and eventually devastated the economy nonetheless. PM Imran Khan is committing the same mistakes that Trump made. Will the outcome be any different?

Coronavirus is doing more damage to large economies than it ever would to smaller ones. Pakistan has been lamenting about a near-bankrupt economy, lack of international investments, rising debts, rising inflation, the flight of capital, struggling industry, and debilitating commercial activity. In such a poor state of affairs, Pakistan’s economy has little to lose. The country also stands to benefit from the rescheduled IMF loan while eyeing international aid both monetary and medical.

Had there been wise leadership in Islamabad things must have been way better for Pakistan and its economy. A proactive COVID-19 strategy from the very start could have saved us the trouble of shutting the country down. But unfortunately, the lockdowns are still not being implemented strictly. We are going too far in allowing the virus to wreak havoc.

Falling oil prices in international markets is an opportunity for Pakistan. Our economy largely depends on petroleum products as the country consumes oil for most of its energy needs. The country should be able to breathe a sigh of relief in the wake of historic cuts in oil prices.

Amid the rhetoric of the plight of the poor and the growing concern for the working class, it was expected that oil prices in Pakistan will also go down to historic levels. Shockingly, the government is considering lowering the prices by Rs 10 to Rs 15 per liter. When oil prices were around 100 dollars per barrel, PTI leadership used to attack the governments of both PPP and PML-N for levying unjust taxes. Now top PTI stalwarts are mum about the unlawful taxes on petroleum products. Is it another scandal of gross corruption in the making that PM will take full credit for?