Pakistan’s textile sector exports decline 1.42pc in FY19
KARACHI: Despite over 30 percent rupee devaluation, country’s overall textile sector exports declined 1.42 percent to $13.329 billion in the fiscal year ended June 30, 2019, as higher cost of doing business kept the sector under pressure.
“With government withdrawing zero-rated status of the five export-oriented sectors along with hefty amount of refunds yet to be distributed by Federal Board of Revenue (FBR), growth in exports is anticipated to remain modest despite hefty rupee devaluation. However, we highlight recently negotiated CPFTA-II with China as an important development which has the potential to enhance country’s exports over the course of next year,” an analyst at Pearl Securities said.
Textile exports fell 15 percent in June 2019 to $1.01 billion as against $1.19 billion in the same month of the last year, data released by Pakistan Bureau of Statistics (PBS) suggest.
Exporters said uncertainty in exchange rate and budgetary measures negatively impacted the exports, as the cost of raw material surged while non-issuance of stuck-up refunds aggravated the liquidity crunch.
Knitwear grew 7.0 percent to $2.89 billion during fiscal year 2018/2019 as compared with $2.711 billion in the preceding fiscal year. Similarly, the export of readymade garments exhibited 3.0 percent growth to $2.65 billion in the year as against $2.577 billion in the preceding year.
The export of raw cotton and cotton year witnessed decline of 65 percent and 18 percent during the comparative fiscal years, respectively. However, export of bead wear remained flat at $2.262 billion in fiscal year 2018/2019.
“Although textile exporters have increased volumes, tough international competition has made it highly difficult to maintain prices,” Ahmed Lakhani at JS Global Capital said.
The State Bank of Pakistan (SBP) in its third quarterly report on Pakistan Economy said that the stagnation in overall textile exports stemmed from a slowdown in export growth (in value terms) of readymade garments and knitwear items, and Year on Year (YoY) declines in cotton fabric and yarn exports.
Except for yarn, export values of all these major products suffered from a drop in unit prices, as quantum exports grew appreciably. The drop in dollar-based unit prices was mainly owed to exchange rate adjustments, as exports rose significantly in Pak Rupee terms, the SBP said.
In rupee term the textile exports registered 22 percent growth during 2018/2019 as compared with preceding fiscal year.