Pakistan’s total exports were recorded at US$2.1 billion for April 2023, down 26%YoY and 10%MoM. Textile exports were reported in at US$1.2 billion, down 29%YoY and 2%MoM, representing 58% of total export.
This takes 10MFY23 total textile exports to US$13.7 billion, down 14%YoY as compared to US$15.9 billion for the same period last year.
Textile exports remained under pressure amid overall slowdown in global economy with higher inflation and interest rates in major exporting regions having lowered purchasing power.
Value-added textile exports declined to US$1.0 billion in April 2023, down 29%YoY and 1%MoM. Within this segment, readymade garments depicted the biggest decline of 10%MoM to US$0.24 billion. This is likely a reflection of normalized demand cycle in China after a sudden surge in demand post recent lockdown ease-off.
On the flip-side, both knitwear and bedwear exports have shown improvement on a MoM basis and increased to US$0.3 billion and US$0.2 billion, respectively, in April 2023. The increase was mainly attributable to better demand coming from United States and Europe, where inflation readings have started easing off.
Cumulative exports of non-value added textile segment were reported at US$0.2 billion, down 32%YoY and 7%MoM.
The demand from downstream segments continue to decline in China after a sudden surge in demand post covid lockdown ease-off. This is the reason yarn and fabric exports declined to US$0.064 billion and US$0.15 billion respectively in April 2023.
Outlook
Going forward, it is believed that textile exports will largely remain subdued in last two months of FY23 and into FY24 amid higher interest rates and, lower global purchasing power.
This, coupled with recent increase in gas prices to US$13mmbtu (up by US$4mmbtu for SNGPL consumers) and increased grid prices with elevated interest rates will likely keep a check on margins and profitability of the sector in the near-term.
These measures have made local exporters less competitive as compared the regional players. The sector is on the watch list of banks for future asset quality issues.