Pakistan's economic downturn hits its once-booming textile industry

Pakistan'sonce-fledging textile industry grapples with a slowdown. Accounting for 60 percent of the country's exports, the textile sector has been struggling since the economybegan facing a balance of payments crisis. Textile exports for 2022–2023 plummeted by 15 percent to $16.5 billion, as per reports.

Pakistan's textile industry had experienced a resurgence towards the end of the COVID-19 pandemic, as the economy was releasedfrom 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 ousterlast year.

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Factories Shutting down

Numerous factories have recently faced closure and are operating well below their full capacity. Accordingto 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 onlyadd to Pakistan's debt burden.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."

Arshad emphasized the need boost Pakistan's exports and fosteran investor-friendly environment that encourages industrial growth and activity, as reported by News18.

Political instability and natural impact

The2022 political crisis, exacerbated by an economic decline, led to the closure of numerous textile factories. In May this year, Khan's arrestculminatedin violence that was quelled only through a crackdown on his party and followers.

Adding to the predicament, destructive floods during the summer of 2022 resulted incotton production reaching a historic low. The government's import freeze, aimed at safeguarding foreign 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 as it employs over40 per cent of the nation's 20 million industrial workers.

(With inputs from agencies)

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