Pakistan’s economy is once again under threat as its once-fledging textile industry grapples with a slowdown. Accounting for 60 percent of the country’s exports, the textile sector has been struggling since the economy began facing a balance of payments crisis.
Adding to the challenges, the global economic slowdown has further impacted the industry. Textile exports for 2022–2023 plummeted by 15 percent to $16.5 billion.
Pakistan’s textile industry had experienced a resurgence towards the end of the COVID-19 pandemic, as the economy was released from restrictions earlier than regional rivals India and Bangladesh. Government support, including reduced energy rates, too helped the industry thrive amid the pandemic. However, these benefits waned after Imran Khan’s ouster last year.
Factories Shutting down
Numerous factories have recently faced closure and are operating well below their full capacity. According to News18, approximately 25 to 30 per cent of textile factories have shut down, resulting in an estimated loss of around 700,000 jobs since last year.
Furthermore, a bailout from the IMF and additional support from Saudi Arabia, China, and the United Arab Emirates, would only add further debt for the financially-strained economy.
Kamran Arshad, the Managing Director of Ghazi Fabrics International, voiced concerns about this approach, “But that’s not a solution, it’s just getting deeper and deeper into debt.” He emphasized the need to focus on boosting Pakistan’s exports and fostering an investor-friendly environment that encourages industrial growth and activity, as reported by News 18.
Political instability and natural impact
The 2022 political crisis, exacerbated by an ensuing economic decline, has led to the closure of numerous textile factories. In May this year, Khan’s arrest culminated in violence that was quelled only through a crackdown on his party and followers.
Adding to the predicament, destructive floods during the summer of 2022 led to a historic low in cotton production. The government’s import freeze, aimed at safeguarding reserves, further hindered the textile sector’s ability to mitigate the shortfall by procuring from external sources.
The downward spiral of the textile industry raises significant concerns for Pakistan and impacts more than 40 per cent of the nation’s 20 million industrial workers.