Nearly six months after devastating floods hit vast areas of Pakistan, the economy and the people are still experiencing major challenges towards recovery. Economists estimated total economic losses to reach about USD 15 billion.
Cotton crops were among the heavily damaged sectors in the country, and the ripple effect of the disaster is now weighing down on textile factories. The floods resulted in a shortage of cotton, which eventually caused the closure of several small textile mills. According to the World Bank, textiles account for around one-quarter of Pakistan’s total industry output and more than half of goods exports.
In a report published last month, Pakistan’s English newspaper The News International (TNI) reported Nasir Mansoor, Secretary General of the National Trade Union Federation Pakistan (NTUF), as saying, “At least one million informal workers – mostly from the textile sector – are likely to lose their jobs.”
“The 2022 floods washed away at least 45 per cent of our cotton crop, leaving textile mills without an essential raw material. The other solution is to import raw material, but delays in LCs [letters of credit] opening have brought all operations to a halt,” Mansoor explained.
The challenges hindering the import of raw materials have translated into an inability to fulfil international orders to consumers in Europe and the US. The dwindling foreign exchange reserves have also negatively impacted the flow of thousands of shipping containers out of the Port of Karachi.
Data released by the Pakistan Bureau of Statistics (PBS) revealed a 14.8% year-on-year decline in Pakistan’s textile exports for January 2023, reported TNI. On a month-on-month basis, the country reported a 2.5% decline. However, the drop in exports cannot be blamed entirely on the floods, as demand for textiles has receded globally.
While the current situation is painting a somewhat grim outlook, industry experts are expecting exports to recover as of this month.
Speaking to German news outlet DW, Khurram Mukhtar, patron-in-chief of the Pakistan Textile Exporters Association, said, “The apparel sector has already received strong and consistent bookings and most of the factories are pretty booked from March to June.”
"Slowdown in the textile sector is a global phenomenon, Pakistan has a strong textile value base and the longest textile exports experience,” he added. He stressed, however, that the authorities need to maintain consistent policies and take concrete steps to ease working capital constraints.
