Pakistan Textiles Industry saw sustainable growth in export during May 2022 despite issues in production. The textile exports continue to grow sharply, rising by 55% Y0Y to US$1.6bn, sustaining above the US$1.5bn levels since October 2021, according to a report by Topline Pakistan Research.

Although the robust growth in exports is attributed to orders placed in anticipation of strong summer demand, the sequential decline is due to gas shortages and Eid festivities during the month, in analysts’ view. This took 11MFY22 exports to US$17.6bn (up 28% YoY).

Pakistan’s total textile export will reach US$19.2bn in FY 22 (July – June 2022).

Overall, Pakistan’s total exports in May 2022 grew sharply by 57% YoY to US$2.6bn. The country’s exports have sustained above the US$2.6bn levels since November 2021, taking 11MFY22 exports to a record high of US$28.9bn, up 28% YoY.

Key Highlights

Cumulative exports of value-added segments in May rose by a handsome 56% YoY (average), led by the Readymade Garments and Bedwear segments. In terms of volumes, that of Readymade Garments increased by a sharp 73% YoY (low base due to depressed demand as lockdowns prevailed in the West), while that of Knitwear remained flat YoY.

Regarding the outlook, Topline Pakistan Research has highlighted that Textile export growth is likely to remain strong in the coming month amid strong order books due to the continued US-China trade rift. According to channel checks, demand for Hosiery and other value-added products such as garments is likely to remain intact in the near term. Cotton procurement at lower than prevailing rates is expected to result in strong margins in the coming quarters. However, ongoing global monetary tightening to contain inflation may potentially lead to a significant moderation in export growth (as seen during the period which followed the global financial crisis), where Home Textiles segment demand is likely to falter the most, in analyst view. Also, the piling up of inventory at major retailers such as Target and Walmart (among others) will likely lead to a moderate slowdown in exports (in terms of revenue) during FY23, in experts’ view.