Textile exports surge to $19.3 billion in FY22
Shipments grow 26% due to sharp rise in global demand
July 21, 2022
Outstanding borrowing by textile manufacturers spiked to Rs1.43 trillion by the end of February 2022 compared to $1.13 trillion in the same month of the previous year.
Pakistan’s textile sector witnessed robust exports that reached $19.3 billion in financial year 2021-22, showing 26% surge over previous year, according to the Pakistan Bureau of Statistics (PBS).
In June alone, the exports were up 3% year-on-year, according to the Pakistan Bureau of Statistics (PBS).
Exports grew owing to increased volumetric growth of 16% YoY in the value-added segment, steep rise in global demand and record high cotton prices, said Topline Research textile analyst Saad Ziker. In terms of value, they reached Rs3.4 trillion, up 40% YoY.
“The textile sector provides a major cushion against the deteriorating economic climate since its exports account for around 60% of Pakistan’s total export volume,” said Aba Ali Habib Securities analyst Ali Asif.
However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries, which may aggravate the situation for Pakistan by increasing the trade imbalance, he predicted.
Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries, Ziker said.
Other value-added segments such as ready-made garments, bed wear and towel posted year-on-year growth of 29%, 19% and 19% to $3.9 billion, $3.3 billion and $1.1 billion respectively.
Despite the global economic crisis, the textile sector is posting export growth and earning foreign exchange for the country, said textile analyst Arsalan Hanif.
However, the textile sector will not be able to maintain a similar growth trend owing to the rising cost of production due to the recent rise in energy cost along with gas and electricity load-shedding, causing fall in export orders as companies are unable to meet export commitments.
Interestingly, Pakistan’s textile exports remained four times high compared to imports in FY22. Textile exports reached $19.3 billion in FY22, whereas imports of the commodity stood at $4.8 billion, including imports of raw cotton, fibre, worn clothing, etc.
As compared to last month, Pakistan textile exports recorded 4% MoM growth in Jun-22 led by 4% MoM increase in volumetric growth mainly because of Eid holidays in May 2022. During the month, major increase was witnessed in Value-added division, especially in the Readymade garments segment, 15% MoM.
The export of Knitwear went up 11% MoM with a 28% increase in volumetric growth.
In Jun-22, all items in basic textiles witnessed a negative MoM and YoY change to $301 million, down 13% MoM and 9% YoY.
In comparison with June 2021, Pakistan textile exports are up by 3% YoY, higher 35% YoY in Pakistan in terms of Pakistani rupee in June 2022.
Expected increase in energy tariffs, fall in global economies and decline in cotton prices are key challenges the textile sector could face going ahead, though rupee depreciation would provide some cushion, Ziker said.
Published in The Express Tribune, July 21st, 2022.