June 21, 2021 (MLN): The total export of textile products witnessed a fall in the month of May 2021 as it declined by 20.5% MoM to clock in at $1.06 billion. When compared with the figures of the previous year, exports of textile goods depicted an upsurge of 41% YoY.
This takes the total textile exports in 11MFY21 to reach $13.75 billion as against $11.57 billion, depicting an increase of 18.85% YoY.
According to the report by Intermarket Securities (IMS), the sharp MoM decrease is seemingly due to the reduction in working hours during Ramadan and long Eid holidays.
However, it is expected that exports will rise considerably from present levels in the coming months, as the Summer season kicks off in the West and restrictions are being removed in the EU and North America.
The data released by the Pakistan Bureau of Statistics (PBS) revealed that during the month, the exports of Knitwear, Bed-wear and Readymade Garments saw a decline of 14%, 24% and 20%, MoM to $293 million, $181million and $194 million respectively. Similarly, Cotton cloth exports fell by 17.1% MoM to $135 million during the month under review.
While, the rise in textile exports during 11MFY21 was mainly the outcome of rising exports of value-added segments where Towels, Knitwear, Bed-wear, and Readymade garments surged respectively by 28.5% YoY, 32.7%YoY, 24.6% YoY, and 14.35% YoY to $838 million, $3.41 billion, $2.47 billion and $2.71 billion compared to 11MFY20.
On the other hand, the textile imports were flattish MoM in May to stand at $363 million where raw cotton imports decreased by 16% MoM to the tune of $130 million. On yearly basis, textile imports rose by a notable 96% YoY. This took total imports in 11MFY21 to $3.51bn, up by 50.6% YoY. The growth was led by a 69.5% YoY increase in raw cotton imports due to strong order flows, amid a significant shortfall in domestic cotton production during FY21TD.
Going forward, the demand for Pakistan’s textiles globally is likely to remain strong in the coming months due to continued rerouting of orders out of China (reduced trade dependency and Xinjiang cotton issue), Abdul Ghani Mianoor, an Analyst at IMS said.
He believes that the capacity enhancement by various textile exporters is an indication of strong order flows, while exports’ competitiveness is also supported by the continued rationalization of tariffs on raw materials and power subsidies from the government.
However, following the recent resolution passed by the EU Parliament to review Pakistan’s GSP+ status, a potential revocation is a key threat to exports (as it will make Pakistan’s textile exports less competitive against that of Bangladesh). According to a recent joint press release by the EU and Pakistan, the revocation of the GSP+ status seems unlikely, as Pakistan remains committed to implementing the human rights conventions in accordance with the EU’s terms, he added.
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