What we know about how economies react to (health) crisis. what this means for MSMEs and what comes after?

The outbreak of coronavirus disease-20191 (COVID-19) has severely affected national and global economies. Various enterprises are facing different issues with a certain degree of losses. Particularly, enterprises are facing a variety of problems such as a decrease in demand, supply chain disruptions, cancelation of export orders, raw material shortage, and transportation disruptions, among others. Nevertheless, it is quite clear that enterprises around the globe are experiencing the significant impact of COVID-19 outbreak on their businesses. We argue that major victims of COVID-19 outbreak are the micro, small & medium-sized enterprises (MSMEs) because MSMEs, in comparison to large enterprises, usually do not possess sufficient resources, especially financial and managerial, and are not prepared for such disruptions likely to go longer than expected. Additionally, these firms are highly dependent on their routine business transactions and a small number of customers (Williams & Schaefer, 2013). Hence, many MSMEs are running out of stock, some hardly continue to operate, and some will be running out of stock soon. MSMEs are the backbone of many economies worldwide that provide income and employment generation to a large number of people around the globe. Similarly, in the case of Pakistan, MSMEs2 are crucial for the economy as they constitute over 90% of the estimated 3.2 million business enterprises and contribute 40% to the GDP with over 40% to export earnings (SBP, 2016; Shah, 2018). These businesses are spread all over Pakistan in rural and urban areas and represent a significant portion of agriculture, manufacturing, retail, wholesale, trade, and service sectors. Due to the COVID-19 outbreak and lockdowns, Pakistani firms are facing unprecedented adverse effects on their businesses.