Textile export industry is highly concerned over the recent downfall in exports. High production cost, currency devaluation, inconsistent policies, political instability and economic meltdown have contributed to the deteriorating exports.
Expressing deep concern over the current economic and political uncertainty in the country, PTEA leadership has said that the political instability and economic slowdown pulled country’s exports down 15.4 percent to 2.2 billion in January 2023 against $2.61 billion in the same month last year, making it the fourth consecutive decline. Pakistan’s economy has been in crisis for months, predating the catastrophic floods. Inflation is backbreaking, the rupee’s value has fallen sharply and its foreign reserves have now dropped to the precariously low level.
The key crisis in the domestic economy is the fall of the country’s foreign exchange reserves to the alarming level; whereas the rest of the crisis included a 49-year high inflation rate of 27%, a 23-year high key policy rate at 16%, a steep fall in exports, increased rate of taxes and 28% devaluation of the domestic currency. Textile industry is operating at capacity utilization of less than 50 percent across the country and a substantial number of jobs have already been lost and many more are to follow.
PTEA leaders were of the view that historic surge in the dollar value and the economic crisis are the foremost factors hurting outbound trade and it has become very difficult to compete in the world market. Consequently, sizeable textile capacity had been severely impaired and textile exports, both in quantity and value terms had declined across the value chain. Textile export industry is already facing a serious blow of non-viability due to the high cost of doing business and also at a comparative disadvantage in respect of production cost in the region.
Due to decreasing exports and failure to end the economic crisis, huge amount of labourers in textile and textile-related industries have lost their jobs. A much higher quantum of funds is stuck as a consequence of 17 percent sales tax and devaluation on all inputs. Countries that compete with Pakistan in global textile exports including Bangladesh, India, China and Vietnam are quoting reduced prices of up to 15% to foreign buyers as compared to those given by Pakistan. In contrast, exporters in Pakistan are battling hard to survive and compete on a very low profit margin.
Consistent export fall is proving that Pakistan’s economy is consistently shrinking. This indicates that meeting the export goal this fiscal year will be more difficult which will lead to further income cuts for the country. Worsening international economic situation primarily caused by the Ukraine crisis combined with floods in Pakistan has negatively impacted the already inefficient supply chains of the country. Pakistan is passing through difficult times and an increase in export proceeds can lift the economy. PTEA stressed for taking stock of serious situation and sit down with the stake holder to identify the real challenges in export growth and resolve them on priority to accelerate the growth rate.
