Pakistan: towards a 30% drop in textile-clothing exports
A few weeks after the devastating floods in part of Pakistan, the impact assessment is still on-going for the local industry. Experts fear international customers will cancel orders, and textile-clothing federations expect exports to fall by at least 30% for the year.
For the fiscal year ending June 30, the All Pakistan Textile Mills Association was originally forecasting $21 billion in exports. However, the floods could jeopardize the association's goal of reaching the $50 billion mark by 2026. This is particularly true at a time when cotton is likely to be in short supply for companies able to continue their activities, due to the fact that a large part of the local harvest has been destroyed. Pakistan is the world's 4th largest supplier of cotton, but also the 3rd largest consumer.
"Current estimates of cotton losses are 3.5 million bales, or 36% of this year's expected crop, and losses are valued at $1.5 billion," says APTMA. "Nearly 70% of Pakistan's textile industry (...) uses cotton produced in the country. As almost 35% of this cotton is produced by farmers in the Sindh province (particularly affected- Ed), the sector is preparing for a shortage. Therefore, Pakistan needs to procure this cotton at the lowest possible cost as a matter of urgency so that the sector can continue to meet export orders.
For the trade organization, the stakes are clear: any delay or failure to deliver export orders would further worsen the "balance of payments" of companies in the sector. Consequently for the sector this means the potential loss of orders coming from big international customers, which were difficult to earn.
But where to find cotton? With the loss of part of the Pakistani crop, international buyers have been looking for alternative sources to prevent any shortage. Pakistan finds itself competing with its own customers in this race for cotton. Turning to neighboring country, India, another massive producer, is currently the preferred source for the Pakistan Textile Exporters Association, which has publicly called for state support in this effort.
The floods come at the end of a fiscal year ending in June during which Pakistan increased its textile-clothing exports by 25.5%, according to local authorities, with 15.4 billion euros worth of goods exported. In terms of textile-clothing, the country was the seventh largest supplier to the United States ($4.22 billion) and the fifth largest supplier to the European Union (€3.34 billion) in 2021.
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