Pakistan’s total exports in August 2021 clocked in at US$2.2bn, down 4% mom from US$2.3bn in July, while up a sharp c.40% yoy (distorted due to the heavy torrential rain last year).
Textile exports remained flat mom, sustaining the US$1.5bn level, while up a staggering c.45% yoy. The handsome growth is a testament to the strong demand for Pakistan’s textiles in the global market, while some regional competitors continued to grapple with Covid-19 lockdowns during the month.
Key Highlights in Textile exports
The flattish mom exports is likely due to shipping constraints amid resurgence of container shortage (port congestions), in our view, despite strong order flows ahead of the Winter holidays in the West (orders expected to have started rolling out). The easing of restrictions in the West amid high vaccination rates will sustain the present growth momentum, in our view.
Cumulative exports of value-added segments decreased an average 3% mom, failing to sustain the US$1.0bn level, as seen in the previous two months. In terms of volumes, however, those of Knitwear fell a sharp 36% mom, while Readymade garments/Bedwear decreased by 5%/1% mom, respectively.
Overall Textile imports in August declined from the high in July by 7% mom to US$0.4bn, due to the 23% mom decline in synthetic fiber imports (cotton imports rose c.10% mom).
The demand for Pakistan’s textile exports is likely to remain strong due to continued rerouting of orders out of China and other regional Asian countries. The capital investments by various textile exporters is an indication of strong order flows, while exports’ competitiveness is also enhanced by recent c.6% PKR depreciation, continued rationalization of imports tariffs on raw materials and power subsidies from the government.
Courtesy – Intermarket Securities Limited.