Global economic slowdown to impact textile trade in the short term

The global economic slowdown is taking its toll on the textile industries in most Asian countries rendering millions of workers jobless. The latest statistics from India reveal that its textile exports declined by 27.4 percent in the second half of 2022.

The export decline in textiles in India is higher than that of Pakistan where the decline in the last six months of 2022 (July-Dec 2022) was 7.07 percent only (the decline in textile exports from Pakistan increased to 8.17 percent during the July-Jan period).

According to industry experts, the gloom in textile trade is due to the global economic slowdown and declining global trade. Textile industries in both India and Pakistan rely mostly on markets in Europe and the United States where the decline in textile exports has been regular since July 2022.

The industry heavily relies on developed economies such as the US and European Union (EU) markets, and the decline in exports to these regions has been consistent since July 2022.

After high inflation in these economies, the consumers do not have a surplus to buy clothing and other textile materials that could be used for a longer period in testing times. Inflation rates in the General prices in the US increased by 5.

4 percent year-over-year in January 2023, and core inflation jumped up by 4.7 percent. In Europe, core price growth was at a historic high of 5.3 percent. In addition, the soaring energy prices are also putting pressure on consumers’ pockets.

After low or near zero interest rates for at least a decade, the banks were forced to leading to raise interest rates to tackle inflation.

Experts point out that consumption may remain weak in the short term in these regions due to inflation outpacing nominal wage growth. As the saying goes, the first casualty in economic slowdown are textiles.