Pakistan’s textile industry struggling due to low exports and inflation

economictimes.indiatimes.com:

textile sector which has conventionally served as the bedrock for most of its industrial labour is staring at a gloomy future. Once a thriving sector of Pakistan's economy, the industry now struggles with low exports amid a deepening crisis.

The past two years have seen the country’s finances struggling including forex reserves, inflation, debt to GDP ratio, fiscal and current account deficit.

This had an adverse impact on various industrial activities including production, employment and trade, according to experts on Pakistan's economy.

Being the most important mainstay of Pakistan's industrial spectrum, the textile industry is facing unprecedented stress. Many of the country’s textile mills and manufacturing units catering to consumers in Europe and the US are now shut down or facing closure due to lack of orders or input shortages.

Already battered by economic slowdown, Covid and disruptions in the global supply chain, the textile industry could not sustain the impact of devastating floods of 2022 which resulted in destruction of a large portion of the cotton crop.

As cotton production reached historic low, the simultaneous political crisis played its part in aggravating the situation.
The government's ad hoc measures like import freeze, aimed at managing foreign reserves, further hindered the industry’s ability to manage the shortfall by sourcing inputs from outside. On top of that, the industry underwent a tax hike recently.

The textile companies also complain of a substantial increase in the cost of capital, with interest rates exceeding 20 per cent in the country. These factors added further strain to the already struggling textile sector in Pakistan, resulting in massive job losses and fall in export volume,