If you run an export-oriented company, you have to prepare for shocks. Textile exports stood at $751 million in May 2020, or a 37% decline when compared to the exports worth $1.19 billion in May of last year. In a note issued to clients on June 17, analyst Ahmed Lakhani at JS Global pointed out that this was the second successive month of massive reduction in textile exports amid the global pandemic.
In fact, all categories of textile exports witnessed double-digit declines. Exports of cotton yarn saw the steepest decline, from $107 million in May last year to $52 million in May this year, or a 51% decline. Highest value areas like garments (which stood at $252 million last May) and knitwear (which stood at $274 million last May), declined by 46% to $136 million, and 34% to $181 million this May respectively. The category of bedwear experienced the least amount of shock, but even that segment declined by 22% year-on-year from $188 million to $146 million.
In fact, the only silver lining the textile industry has is that at least the month of May was not as bad as April. That particular month, which saw exports decline by 65% year-on-year to $404 million, represented a historic, multi-decade low.
According to the report, there was also a delay in shipments to major markets, such as the US and Europe, which were severely affected due to Covid-19.
One good thing that can be said is that the base level of April was so low, that May figures actually look like a solid rebound: exports in May shot up 86% when compared to April. Every single export segment showed a double-digit month-on-month increase, with segments like towels and garments increasing 127% MoM and 121% MoM respectively.
On a monthly basis, the share of textiles in total exports in Pakistan declined to 42% in April, and 53.8% in May.
While the textile industry has somewhat reoriented itself towards exporting masks and creating PPEs, with varying levels of success, the orders are simply not enough to make up for the loss in other segments. In reality, most of these ‘new channels’ are often one time, non-repetitive, and have low margins
That same organization released a press release on June 23, in which it rejected the recently announced budget, and asked the government to competitively price energy, lower sales tax, and have the turnover tax reduced from 1.5% to 0.5%.
