The Covid-19 pandemic has affected the income of around 80 percent of households in Pakistan, says the Asian Development Bank (ADB).

The bank in a latest report, “impacts of Covid-19 on households in CAREC countries” stated that the impacts of the Covid-19 outbreak have heavily affected CAREC member countries, which include Afghanistan, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, the People’s Republic of China (PRC), Tajikistan, Turkmenistan and Uzbekistan.

The Covid-19 crisis and the resulting falls in demand due to both uncertainty and policy measures such as lockdowns, “social distancing,” and travel restrictions are having a severe impact on the CAREC member countries.

In order to better understand these impacts, computer-assisted telephone interviews (CATI) of households were conducted in 10 countries from the CAREC region (excluding the PRC) over the period May–August 2021.

The samples were representative of the income classes and the rural and urban population in each country.

Income decline ranges from 80 percent of households (Pakistan) to 20 percent of households (Mongolia).

Among households with a declining income, the largest share (17.3 percent) reported that their income had fallen by 1–25 percent, 15.9 percent reported that their income had declined by 26–50 percent, and 12.3 percent of households reported over a 50 percent income decline.

It stated that the Covid-19 pandemic affected the income of all households relatively equally regardless of their economic status before the pandemic.

Households with wages as income sources were more likely to experience income declines in Afghanistan, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, and Pakistan, but less likely to do so in Azerbaijan and there were no effects in the other three countries.

The report noted that similarly to the case of ASEAN households, being located in a lockdown area on average increases the likelihood of experiencing an income decline. This is also observed in most countries, except for Afghanistan, Turkmenistan, and Pakistan. While living in a lockdown area does not have an effect on the likelihood of experiencing an income decline in Turkmenistan and Pakistan, it reduces the likelihood of income decline in Afghanistan.

Financial difficulty is defined as a lack of financial resources for at least a week.

About 76 percent of households in the sample reported that they had experienced financial difficulties.

However, the share of households that reported financial difficulties varies across countries from 40 percent in Azerbaijan to 96 percent in Afghanistan.

In nearly all countries, with Azerbaijan being the exception, more than half of the households reported financial difficulties.

Nearly all (above 80 percent) households reported financial difficulties in Kazakhstan (81 percent), Pakistan (84 percent), Turkmenistan (93 percent), Georgia (92 percent), and Afghanistan (96 percent). These numbers are higher than in SEA, which means that more households reported financial difficulties in CAREC than in SEA.

The share of households with income declines ranged greatly among CAREC countries from 80 percent of households (Pakistan) to 20 percent of households (Mongolia). Among households with a declining income the largest share (17.3 percent) reported that their income had fallen by 1–25 percent, while 15.9 percent reported that their income had declined by 26–50 percent, and 12.3 percent of households reported an income decline of over 50 percent. On average, households with income from wages tended to experience a decline in income compared to other sources of income such as agricultural production, business, and self-employment.

Less educated household heads were more likely to experience income declines due to the Covid-19. Female-headed households were less likely to experience a decline in income due to the Covid-19. Households located in a lockdown area on average increased the likelihood of experiencing an income decline. Households in rural areas were also less likely to experience an income decline, but this relationship is only observed in two countries (Afghanistan and Mongolia), while Georgian rural households were more likely to experience an income decline than their urban counterparts.

Pandemic loans (February 2020–August 2021) were obtained by all CAREC countries, mainly by the PRC (20 percent), Pakistan (24 percent), Uzbekistan (23 percent), and Kazakhstan (13 percent). Pandemic loans were particularly high in April–August 2020. Nearly all of these loans (90 percent) were provided to governments.

This report was first published in Business Recorder on Jan 22, 2022.