Exports are regarded as the backbone of any country but unfortunately in Pakistan, the textile sector, one of the major sources of our exports is going down due to shadow of uncertainty since the global Covid-19 lockdowns and crunch economic situation.
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”.
From July to December this fiscal year, exports were declined by 5.79 percent, while in December exports dropped 16.64 percent on yearly basis. The exports dropped by 3.64 percent in the month of December.
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.
Prime Minister Shehbaz Sharif while taking notice of drop in the country’s exports has formed a committee to submit recommendations. The prime minister has sought recommendations from the committee headed by Commerce Minister Naveed Qamar within 14 days.
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.
