Rupee devaluation, rising debts, taxation issues, below-the-mark growth of the large-scale manufacturing sector, and rising energy cost are the biggest barriers to economic growth. Political instability in the country also led to increased economic uncertainty. Pakistan has achieved GDP growth at 5.97% in FY-2022; however, this high growth is unsustainable and has resulted in financial and macroeconomic imbalances as it showed signs of excess demand and overheating through an increase in the import volume of capital and consumer goods, energy and non-energy imports.
However, on the external front, the exports, especially the textile exports, grew remarkable on account of policy support provided, including regionally competitive energy tariff rates, export facilitation schemes, enhancement in coverage and loan limits under LTFF to facilitate exports and tariff rationalized in various sectors in line with objectives of National Tariff Policy 2019-24. However, this growth may be reversed as big challenges are standing ahead. Continuous torrential rains and floods have engulfed Pakistan’s cotton fields resulting in irreparable loss to the sector. Many cotton-producing areas have suffered heavy damage in Punjab due to stormy rains. The cotton crop of over 210,000 acres of land was affected due to the flood, due to which the farmers had to bear a loss of Rs 356,33 million.
Earlier, Pakistan textile exports hit an 11-month low in July 2022 to $1.48 billion, down 13% monthly (MoM). Under the Value-added division, the Ready-made segment remained a major underperformer as exports witnessed a 17% MoM decline to $305 million during July 2022 due to a sharp decline in volumetric sales by 7% MoM. Other value-added players such as Knitwear, Bedwear, and Towel also posted a decline of 8% MoM, 11% MoM, and 18% MoM to $435 million, $254 million, and $75 million, respectively. The textile sector in Pakistan has an overwhelming impact on the economy, contributing 60% to the country’s exports. In today’s highly competitive global environment, the textile sector needs to upgrade its supply chain, improve productivity, and maximize value-addition to survive. Therefore, the stakeholders should work together to help and support the textile sector with new incentives and policies; otherwise, the sector and, indirectly, the country’s economy will be under dark clouds.
