Pakistan's textile exports rise by 6% in December amid challenges

Pakistan’s textile exports rose by 6% in December compared to the same month last year, according to provisional data from the All Pakistan Textile Mills Association (APTMA).

The increase pushed textile exports to $9.09 billion in the first half of fiscal year 2024-25 (FY25), marking a 10% rise from $8.29 billion during the same period last year.

In 2024, textile exports reached $17.47 billion, up 6% from $16.07 billion in 2023.

Despite weaker global demand for textile products, India, Pakistan, and Vietnam are expected to benefit from displaced orders from Bangladesh and China, particularly for value-added products such as knitwear, bedwear, and ready-made garments.

Exports in these segments rose approximately 20% year-on-year during the first five months of FY25.

However, the domestic spinning sector, which supplies yarn locally or exports it to China, remains under pressure. Yarn exports to China fell by 39% compared to last year due to the availability of cheaper imported yarn and lower domestic cotton supply.

To meet export demand, Pakistan is projected to import five million bales of raw cotton at a cost of approximately $2 billion, compared to 1.2 million bales worth $0.45 billion imported in FY24.

Analysts believe that if the current export growth rate of 10% continues through the remaining months of FY25, the increased cotton imports will likely minimize the net impact on the textile sector's trade balance.

Looking ahead, the demand for value-added products is expected to improve as global importers diversify their orders away from Bangladesh and China.

Additionally, ongoing monetary easing is anticipated to support the sector’s profitability, despite challenges such as higher export taxes, accumulating government receivables, and depressed margins due to increased energy tariffs.

Concerns persist regarding potential cuts in gas supply for captive power plants, though some relief may come from backup fuel and power arrangements, including conversions to coal consumption by certain players.