Pakistan’s textile sector managed a modest recovery in 2025, but prospects for 2026 are increasingly uncertain. While exports rose by about 15.7% in the first eleven months of 2025 to $17.85 billion, industry voices warn that this improvement may not be sustained as global trade dynamics shift and domestic constraints persist.
The 2025 uptick provided temporary relief to the country’s largest export sector, which accounts for more than 55% of total exports and employs millions. However, much of the growth was price-led rather than driven by higher volumes, suggesting limited structural improvement. Stronger demand early in the year and relative production stability helped exporters recover from earlier slowdowns, but core weaknesses remain.
Industry representatives argue that the absence of a comprehensive, inclusive textile policy was a major missed opportunity. SME-focused associations say they were largely excluded from consultations, leaving critical issues—such as high energy costs, taxation, financing, and low productivity—unresolved. As a result, expectations for export growth in the current fiscal year remain muted.
Externally, renewed protectionism in the US and China’s strategic redirection of exports are reshaping global competition. With Chinese textile goods increasingly flowing into European markets, Pakistani exporters face stiffer competition in the EU, despite GSP Plus advantages. Buyers are reportedly favoring Chinese suppliers offering comparable quality at lower prices.
At the same time, Chinese textile investments under CPEC 2.0 are creating mixed reactions. While they could strengthen Pakistan’s value chain if focused on intermediate inputs, industry players fear intensified competition from local mills that lack integrated supply chains.
Rising energy prices, higher taxes, political uncertainty, and limited market diversification have further strained exporters. Stakeholders stress that without urgent policy action, rationalized energy costs, and aggressive expansion into new markets such as Africa and Central Asia, Pakistan’s textile sector may struggle to even maintain current export levels in 2026. Many are calling for an emergency-style government response to prevent a broader economic and employment fallout.
