Pakistan floods unleash desperate economic crisis

The catastrophic floods spreading across Pakistan have dashed any hopes of an economic recovery in the poverty-stricken country. The estimated death toll is around 1,500, but this number is expected to increase significantly in the coming weeks.

Millions of displaced Pakistanis are threatened with starvation and an epidemic of water-borne diseases. According to the United Nations, there have already been over 120,000 documented cases of dengue and malaria, while hundreds of thousands have been affected by skin infections and diarrhea. The World Health Organization stated that there has been a 30 percent increase in cases of diarrhea around the country since the flooding began.

The Pakistani economy had already been reeling from the global economic crisis and the militancy fueled by Islamabad’s partnership with US imperialism even before the onset of the floods. Over 30 percent of the country’s cultivated farmland is submerged while nearly 20 million Pakistanis, 13 percent of the population, have been displaced by the floods. The Pakistani ruling elite and its allies abroad fear that widespread social unrest could arise out of food shortages and inflation caused by the devastation.

On Monday, Pakistan’s High Commissioner to Britain stated that the total cost of rebuilding Pakistan after the floods could reach $43 billion. The IMF has warned of an economic disaster, and Pakistan’s Finance Ministry has stated that the country would miss this year’s gross domestic product growth target of 4.5 percent. Analysts predict that the damage and cost of recovery could reduce economic growth by more than 2 percentage points. Some are predicting a growth rate of 0 percent.

The Pakistani economy grew by only 4.1 percent last year, well below the rate of growth required to create enough jobs for the increasing numbers of young and working age people. According to Mustafa Pasha, an analyst with BMA Capital Management in Karachi, the deficit may end up being 2 percentage points wider than the official target of 4 percent of GDP. Another analyst stated that the deficit would likely reach 8 percent of GDP.

“The damage to infrastructure will hurt production at factories, while the flooding has already washed away crops,” said Pasha. “Inflation will accelerate in the coming months. Under these circumstances, it is very difficult to maintain fiscal discipline.”

Apart from destroying and damaging countless homes across the country, the floods have caused considerable damage to roads, bridges, and most troublingly, irrigation and agriculture. The damage to agriculture is of particular concern as it is the backbone of the Pakistani economy. About two-thirds of Pakistanis are employed in agriculture-related work, and over 70 percent of those affected by the floods are dependent on agriculture for their livelihoods, according to the United Nations. Nearly 17 million acres of farmland have been destroyed by the floods. The World Bank estimated crop loss at $1 billion, but stated that the full impact on soil erosion and agriculture won’t be known for another month when the water recedes. Pakistani Foreign Minister Shah Mahmood Qureshi stated that crop losses would amount to “billions of dollars.”

“It seems we’re doomed to walking through a dark tunnel. We’re on an unending path of misery,” Morio Pahore, a farmer from Thul in southern Pakistan, told AFP. “We had goats and buffalo and a wooden hut. We had grain to eat. The river ate everything, leaving the whole family hungry and empty-handed. I don’t think we can start again for many years. Everything is under water and even if the river recedes, the water will be there for a long time.”