A report by Intermarket Securities (IMS) predicts Pakistan’s textile exports will fall by only 5-10 per cent in the FY 2021 rather than the 20 per cent predicted earlier. The report states, Pakistan’s textile industry will recover quicker from the crisis compared to competitors. This can be attributed to the country’s largest export market Europe coming out of the lockdown, its home textile exports going strong, and the added benefits it may receive from global orders being rerouted out of China.

The government has already taken measures to both protect exporters during the present crisis and remove longstanding barriers to competitiveness. Several input costs have been subsidized and Pakistan’s currency is no longer overvalued.

The IMS report predicts home textiles and healthcare segments will recover earlier than garments. There is an emerging demand for pandemic-related textiles such as masks and PPEs. The sector has corrected 9 per cent since the onset of the pandemic while expected upcoming demand of back-to-school and winter clothing can be key catalysts in further reviving the industry. Pakistan’s export-to-GDP ratio has shrunk from 17 per cent in 2003 to 9% in 2020 due to weak policy incentives, tough local business conditions and the rise in competitiveness of regional countries.

According to the report, though the pandemic and its socio-economic impacts have led to the worst global crisis since the financial crisis of 2008-09, massive government stimulus packages along with the lifting of lockdowns globally have led to a recovery in retail sales during May-June.