Dwindling textile sector
A shadow of uncertainty persists ever since the global Covid-19 lockdowns. Pakistan has not just been struggling with international debt repayment, but the Russo-Ukraine war has also aggravated the economic woes of the country due to a surge in oil prices. The textile sector seems to be under a severe amount of stress with several local companies curtailing production by up to 50% as a temporary measure against “widespread demand destruction”. This is not at all a good sign as textiles constitute the main source of the country’s export.
The global textile market is extremely massive and competition is usually between India, Pakistan, Bangladesh and China. Pakistan’s export sector was once flourishing but currently it seems that Bangladesh has successfully captured the market, with major investors shifting there. Businessmen claim that this is because they are able to produce cost-effective products while Pakistan’s textile industry is faced with myriad internal problems. A shortage of dollars has restricted businessmen from importing raw material and machines. Moreover, sky-rocketing inflation has made it impossible to sustain the struggling labour force while keeping costs low. Energy shortage also seems to be a serious issue as gas reserves are depleting and oil prices are at an all-time high in the international market. In such a situation, factories are finding it more feasible to curtail operations and lower their workforce in order to cut down costs and maintain profits. This reduced productivity will negatively impact industrial growth by 4% in the coming financial year but no plans have been made by the government to dampen the impact of a global recession.
The ruling coalition is faced with a serious dilemma and only prudent policy measures along with external help can pull the country out of the quicksand. Not only does the government have to provide incentives to the textile sector but it also has to protect the interest of the labour force — all while remaining within a tight budget amid a severe economic slowdown.
Published in The Express Tribune, January 6th, 2023.
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