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Analysts feel performance of Pakistan textiles sector far from satisfactory

In continuation of the last month’s positive performance, Pakistan’s external trade showed improvement in November 2016 with exports amounting to US$1.76 billion, says an analysis. This showed a reversal from the consistent monthly downward trend seen this year. The textiles and clothing sector, that constitutes more than 60 per cent of the country’s exports also picked up its pace, rising 9.7 per cent Y-o-Y to US$1.05 billion in the month under review.

This growth was broad-based recovery in both low value (+15.6 per cent Y-o-Y) and value-added segments (+7.6 per cent Y-o-Y). However, on a cumulative basis, 5MFY17 textile exports were still lower at US$5.13 billion.

Going forward, analysts expect textile exports to largely remain under pressure due to one, demand side bottlenecks with weak Chinese demand outlook and economic slowdown in the EU following Brexit, two, lower currency competitiveness amid sharp depreciation in regional currencies and three, low commodity prices.
Having talked about that, the sector anxiously awaits the yet to be announced incentive package estimated at around Rs75 billion by the Government of Pakistan (GoP). This package is aimed at enhancing export competitiveness over regional countries and providing relief to the textile sector.

Performance of the value added sector posted growth with Knitwear, Readymade garments and Bed wear registering double digit growth. Moreover, the low valued added segment depicted a commendable recovery after a consistent decline this year, where the exports of cotton yarn increased by 42.1 per cent Y-o-Y/10.3 per cent M-o-M. However, on a cumulative basis, textile exports after recovery still remained unimpressive with 5MFY17 exports recording a decline of 2.0 per cent Y-o-Y.