KARACHI: Pakistan’s textile sector exports declined by 11% in 8MFY23 (July-February 2022-23) to stand at US$11.2bn vs. US$12.6bn in the same period last year.

The slowdown is mainly attributable to global recession resulting in lower export orders coupled with challenging domestic environment, an analyst at Insight Securities said.

Segment-wise, value-added products (Knitwear, Bedwear, Towels, Readymade garments) witnessed a drop of ~8.8% YoY, to stand at US$7.96bn in 8MFY23.

Similarly, basic textile (i.e. Raw Cotton, Cotton Yarn, Cotton Cloth) slump by ~21.4% YoY to clocked in at US$1.93bn, while other textile products also plunged by ~7.5% YoY to reach at US$1.33bn in 8MFY23.

On volumetric front, textile exports dwindled by 19.9% YoY in 8MFY23 compared to same period last year. This decline is led by a dip in basic textile export, which recorded a decline of 27% YoY. Similarly, value added and other textile products also fell by 12.1% and 27.4%, respectively.

On MoM basis, value added volumes declined by 9.1% while prices drop 4.2%resulting a decline in value added exports by 12.9% in Feb’23 to clocked in at US$0.81bn. The major contributor for decline in value added export are knitwear exports which are down by 18% MoM in dollar terms and 16% in volumetric sales. On the flipside, readymade garments have posted volumetric growth of 15% while its prices plunged by 24%.

On MoM basis, basic textile exports volumes decreased by 5.4% whereas prices drop by 2.4% leading to decline in basic textile exports by 7.7% in Feb’23 to clocked in at US$0.21bn. The increase is mainly attributable to decline in cotton yarn exports by 18.1% (volume ↓21.7%, price ↑4.6%), while cotton cloth exports declined by 2.7% (volume ↑11.2%, price ↓12.4%).

Outlook

Textile exports have remained sluggish amid weak demand and headwinds in domestic economy. We expect textile exports to increase in volumetric term in coming months amid gradual decline in inventory pileup at export destinations, however, decline in product prices is likely to offset the impact. Furthermore, headwinds in domestic economy will continue to hamper textile players which includes unavailability of locally produced cotton, delays in clearance of imported cotton & other essential inputs, elevated gas & electricity tariffs and increasing finance cost.