Textile Industry in Crisis Due to Declining Economy in 2023

In a final attempt to solve the problems faced by the textile industry, a group from the All Pakistan Textile Mills Association, led by its chairman, had an important meeting on Thursday with Caretaker Federal Minister Dr. Gohar Ejaz.

Textile Sector Crisis

The main reason for the meeting was to go over some options to boost the business opportunities of the textile sector, as the industry is facing a severe crisis and some decisions had to be taken

The meeting between the textile industry delegation and the interim minister had a discussion on practical solutions to help the textile industry improve its efficiency and expand further.

In reply, Dr. Gohar Ejaz, the Interim Federal Minister, showed a strong interest in finding real ways to increase trade in the textile sector.

He recognized the immense potential in the textile industry and encouraged the delegates to come up with practical ideas to harness this potential.

Government’s Pledge to Revitalize Textile Sector Amid Global Challenges

The minister’s appeal for a realistic solution underscores the government’s commitment to rejuvenate the textile industry and use its powers to make a significant contribution to the national economy.

Industrial manufacturing in Pakistan, like other parts of the world, has been adversely affected by a decline in global demand and rising energy costs due to the conflict in Ukraine.

Textile Industry Challenges in Pakistan Amid Economic Turmoil

However, the challenges facing the textile sector, which makes up 60 percent of Pakistan’s exports, are worsened by the dire condition of the economy and prolonged periods of political turmoil.

In Pakistan, the industry received a boost towards the end of the COVID-19 pandemic. This happened when it was released from restrictions before its regional competitors like India and Bangladesh. Additionally, it benefited from government support, which included reduced energy costs.

But the problem came in 2022-2023 when the textile exports fell by 15 percent to $16.5 billion. Which was a great decline that led to many problems. Factories had shut down, which led to their workers being unemployed, hence increasing unemployment in an already troubled economy.

Textile Exports Plunge

“Two years ago, we were on a very high growth trajectory… we were confident that our exports this year would go to $25 billion,” said a managing director of a Textile factory.

Unfortunately, when you have political instability and things are not clear, and the policies of the government are reversed, this whole thing has gone into a tailspin.

Political Turmoil Sparks Economic Concerns

The political turmoil started in April last year when the former Prime Minister was dismissed as prime minister by a vote of no-confidence. Which began the troubles for the ordinary people.

The textile and clothing sector gives employment to around 40 percent of Pakistan’s 20 million-strong industrial workforce, and a decline in the textile industry is a big issue for these individuals and hence the formerly employed workers are worried by the shutdown of factories.

Pakistan’s Textile Exports

The main places where Pakistan exports its textile products are the United States, the European Union, the United Kingdom, Turkey, and the United Arab Emirates. They send things like cotton fabrics, knitwear, bed linens, towels, and ready-made clothes to big brands like Zara, H&M, Adidas, John Lewis, Target, and Macy’s.

Factory Closures and Job Losses in Pakistan

But a lot of factories have permanently shut down in recent months or at least temporarily or are no longer running at full capacity. There is a big decline in the number of factories.

Around 25 to 30 percent of all textile factories have closed. It is estimated that about 700,000 jobs have been lost in the last year or year and a half, and these unemployed people have no choice left.

Textile companies saw a massive increase in the cost of borrowing money, dealing with huge interest rates of over 20 percent, as the central bank aimed to control extremely high inflation levels, but can’t seem to control it.

The future looks in the shadows for both the consumers and producers.

3 responses to “Textile Industry in Crisis Due to Declining Economy in 2023”

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