Pakistan is unlikely to maintain the export record of $25 billion this year as the textile sector, which shares over 60 per cent in the country’s over all exports, is likely to face a decline of over $3 billion.
The drastic reduction in the price cotton in international markets and the severe energy crisis in the country have affected the production and demand of textile items causing a continues decline in the country’s exports, Chairman Landhi Association of Trade and Industry (LATI) Ziad Bashir, told Profit.
He claimed that under the present circumstances textile exports are expected to face a decline of over $3 billion, which could reduce Pakistan’s over all exports to around $22 billion as compared to the $25 billion recorded this year.
Global recession and energy crisis: Ziad Bashir, who is also Director of Gul Ahmed Textile Mills, Karachi, Pakistan, said that besides the huge decline in cotton price, which had skyrocketed last year, the major reasons of reduction in exports were the global recession, internal security concerns, energy crisis and high costs of production as a result of the energy dilemma.
Besides depreciation of Pakistani rupee which significantly increases the cost of imported inputs, rise in inflation rate and high cost of financing was also adversely affecting the textile industry. He also linked the decline in domestic and foreign investments to growing energy shortages in the country as well as the high cost of borrowings.
“An increase in the trend of using iPhones, Blackberry and other costlier modern technology globally has forced people to reduce spending on other items which also include textile made ups,” claimed Ziad Bashir.
Exploring regional markets: In reply to a query, he said, the only way to reduce the aftermath of global recession and other crisis on the country’s exports was to search the unexplored regional markets which have comparatively huge demands for Pakistani textile.
He said that current fall in exports of textile was an alarming situation for the policy makers as the slow down in growth of textile exports would ultimately affect the total exports of the country. On the other hand Bangladesh – enjoying the Least Developed Country facilities in global markets especially Europe – was now eyeing textile export worth $30 billion during fiscal year 2011-2012, he said. Ziad lamented that the concerned authorities here were yet to take steps in order to maintain the current export growth despite the tall claims of exploring new markets and trade centers in various regions.
South Asian Competitors: The South Asian competitors including India, China and Bangladesh, on the other hand were supporting their textile industry in view of the economic slowdown in the international market. The high interest rate in the country, he said, was not favouring the industry and future investments.
According to recent data Pakistan’s exports during November 2011 were valued at $1.552 billion which were 13 per cent lower than the level of $1.776 billion during November 2010. Exports recorded last month also declined by 18.14 per cent as compared to the exports registered in October 2011.
The imports during last month were recorded $3.729 billion registering a growth of 19 per cent against the imports of $3.131 billion registered in November 2010. However the imports had shown only 3.38 percent growth if compared with the imports of $3.607 billion recorded in October 2011.
The cumulative figures show that Pakistan’s exports during July-November 2011-12 were $9.434 billion, while in the corresponding period of the last year 2010-11 exports were $8.959 billion, which shows 5 per cent growth. Imports during July-November 2011-12 were $18.424 billion as compared to $15.404 billion during the same period of the year 2010-11, registering 20 percent growth.