Pakistan: A textile industry in crisis
By 2021-2022, Pakistani textile exports had jumped by 25%. The country, which was almost triumphant out of the Covid crisis, relied on good growth. But in 2022-2023, the same exports fell from 15% to $16.5 billion. Disenchantment due to several factors.
Like many others around the world, Pakistan's textile industry is experiencing the consequences of the global decline in consumption and rising energy costs caused by the war in Ukraine. But not just... Last summer, heavy flooding took half of the cotton harvest (cf.Pakistan: Floods affect textile industry). As the government blocked imports to overcome the decline in foreign exchange reserves, it was not possible to obtain supplies abroad. For several months, thousands of containers full of raw materials stagnated in the port of Karachi, growing close to30% of textile factories to close with 700,000 jobs lost. The textile and clothing sector, which accounts for 60 per cent of Pakistan's exports, employs 40 per cent of the industrial labour force, or more than 8 million people.
The country sought assistance from several countries and sought assistance from the International Monetary Fund (IMF). Saudi Arabia and the United Arab Emirates gave him a financial boost. In mid-July, IMF provided a $3 billion loan but announced the end of energy subsidies. The cost of electricity then blazed, hitting textile companies, already facing energy shortages, and which are struggling to remain competitive with their competitors in India, Bangladesh, Sri Lanka, Vietnam and China.
Industry in the sector hopes that the upcoming elections will bring economic stability and political calm after the turmoil of recent months. Escaped from power by a motion of censure in April 2022, the former Prime Minister was sentenced on 5 August last to three years in prison for corruption and five years ineligible. However, on Tuesday, a court in Islamabad suspended his conviction, which could allow him to run again for election.
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