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The textile exports of Pakistan are experiencing and expecting a second external surge. The first one was when the first wave of the pandemic resulted in lockdowns across countries including key textile exporters like India and Bangladesh. Orders were diverted and poured into Pakistan’s textile industry. And now when it was being anticipated that strengthening and reopening of global markets from lockdown and ensuing vaccination drives in countries including Bangladesh and India would be key factors in restricting export growth in the textile segment, the new and deadly wave of covid-19 in India along with decline in textile exports from China are expected to give Pakistan’s textile exports another boost.

Exports of textile sector as per Pakistan Bureau of Statistics (PBS) were seen climbing by over 30 percent year-on-year in March-21, while there has also been a recovery on a month-on-month basis where textile exports increased by 9.8 percent. Where part of the growth is attributable to export growth in the value-added segment, it was also due to a contrasting performance in March-2021 versus a weak base of March-20 when the country went into its first real lockdown amid rising first-wave covid cases.

As per PBS data, textile export 9MFY21 were up by a little over 9 percent year-on-year. Much of the growth in textile exports in March-21 as well 9MFY21 is attributable to the growth witnessed in value-added segment particularly knitwear, bedwear and home textile (all recording staggering double digit growth year-on-year). Readymade garments - though a key value-added product – continued its relatively slow-paced (23% YoY) growth in March-21 and 9MFY21 as changing global dynamics amid the pandemic has pushed the demand for home textiles much higher than garments. Export of cotton yarn also continued to see spike for a second month in FY21 (up by 39% YoY in March-21), which was despite shortage of yarn in the country and the textile companies crying for duty free import of yarn.

Month-on-month trend shows that the export growth was led by non-value-added segment such as cotton cloth (23% MoM). And a key reason for that as highlighted by a research note by AKD Securities is extra efforts by the local manufacturers to capture US textile imports from China after order cancellation from Xinjiang (that accounts for 0 percent of Chinese output) due to human rights violation.

But let’s not get too optimistic about exports just yet. Like India, Covid cases in Pakistan are also surging rapidly with much more restrictions and lockdowns in place and expected in the coming weeks – which could sweep away benefits and also result in a decline in exports in the coming months.