Textile exports don't impress

Textile exports--Pakistan's largest export-earning segment--had shown some heart in the just-concluded FY14 by registering a 5.3 percent year-on-year growth. But now at the start of FY15, data show lower July textile exports compared to last year. Overall, the textile products fetched home $1.17 billion in July. At this level, year-end exports would register a paltry growth of mere two percent.
However, the plus side is that July exports are five percent greater than the June proceeds. That could signal some demand increase, presumably related to the EU markets GSP+ status for Pakistan.
The saving grace for July exports was that the exports of value-added items such as knitwear and bed-wear clocked growths of 21.7 percent and 14.5 percent year on year, respectively. It seems that the said categories managed to exhibit decent resilience in grappling with the energy crisis.
However, low value-added items didn't do too well. The large fall in exported units of cotton yarn and cotton cloth over previous July could be attributed to fall in production capacity especially that of fabric production in Punjab due to austere power supply shortfall. Then there has been the drop in international cotton prices and local cotton prices, which went down from Rs7,264 per maund to Rs5,500 per maund.
The textile exports need to pick up some pace this year. But in the same difficult way as to please one's spouse, the textile lobbyists are hardly ever happy. They tend to rest all blame on the government's doors. Recently, an APTMA member told BR Research that the growth in FY14 exports might have been greater by at least 10 percent if the effect of rupee appreciation was translated into some decrease in GIDC.
Now they have another worry: the container owners are reluctant to come into Punjab because of the apprehension of impounding of their containers, as the political showdown is about to enter its third week.
But the government also has work cut out for itself once the situation normalises. The much-delayed Textile Policy (2014-19) will probably postulate relief measures to the value-added textile sector and may target to increase textile exports to $26 billion in next five years. However, the government needs to improve the energy and security situation in the country if it wants to see a decent increase in the new fiscal year.

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July textile exports

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                                $ (mn)     MoM chg     YoY chg

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Cotton yarn                        131       -0.7%      -35.3%

Cotton cloth                       212        7.0%       -8.1%

Knitwear                           239       15.8%       21.7%

Bedwear                            196        9.0%       14.5%

Towels                              64       -2.4%        7.4%

Readymade garments                 186       -0.3%        3.8%

Textile group                    1,169       5.01%       -2.4%

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