Expensive gas prices are taking a toll on Pakistan’s textile exports, resulting in an 8% monthly and 7% yearly decline to $1.3 billion in November. In local currency, textile exports amounted to Rs376 billion, marking a 7% monthly decrease but a notable 19% yearly increase, attributed to the rupee’s depreciation against the dollar. Basic textiles experienced a 14% monthly downturn, coupled with a 20% yearly upswing to $243 million in November.
The significant yearly growth is primarily driven by a remarkable 12-fold increase in raw cotton exports. This surge can be attributed to a robust cotton crop this year compared to the previous year, which was adversely affected by floods.
Value-added textile exports hit $920 million, showing a 6% increase month-on-month but a 12% decrease year-on-year. Towels were the main contributors, experiencing a 21% drop in both monthly and yearly exports. Knitwear faced a 5% monthly and a 12% yearly decline.
Bedwear witnessed a 16% monthly and an 8% yearly decrease, while readymade garments saw a 12% yearly decline but a 5% monthly increase.
In the first five months of FY24, textile exports contracted by 6%, shrinking from $7.4 billion to $6.9 billion. This decline is attributed to a global economic slowdown and reduced demand for textile products.
Despite the challenges, the government aims for a $25 billion textile export target. However, projections for FY24 estimate textile exports to reach $17 billion, marking a modest 3% year-on-year increase.
November Sees a 9% Increase in IT Exports
In November, Pakistan witnessed a promising nine percent increase in Information Technology (IT) exports, totaling $259 million, surpassing the 12-month average of $222 million. This upswing is attributed to the State Bank of Pakistan’s recent decision to elevate the permissible retention limit from 35% to 50% in the Exporters’ Specialised Foreign Currency Accounts.
The stability of the rupee further incentivized IT companies to repatriate their foreign income, contributing to the growth in IT exports. This positive trend signifies the influx of money brought back to Pakistan by technology firms. According to Caretaker IT Minister Umar Saif, IT companies have potentially parked $1-2 billion outside of Pakistan, highlighting the significant impact on the country’s economic landscape and the potential for further expansion in the IT sector.