Textile exports expected to grow with rupee devaluation  

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KARACHI: Following the rupee depreciation, textile sector, having around 60 per cent share in total exports, is expected to be its key beneficiary as its exports expected to grow by 7.5 per cent year on year for the Financial Year 2018.

However, the sector is already benefitting from export subsidy (4 to 7 per cent on FOB value of exports). According to a report, the industry is demanding for further incentives (electricity tariff reduction by Rs 3.53 per share) has a low likelihood of materializing given lack of fiscal space.

Pakistan’s total exports during November 17 registered an encouraging growth of 12.35 per cent YoY and 4.56 per cent MoM to stand at $ 1.97 billion where both textile (up 7.45 per cent YoY) and food exports (up 22.19 per cent YoY) witnessed an upward trend.

A likely impact of an increase in final product prices, textile exports maintained its recovering trend on November 17, rising 7.45 per cent YoY to reach $ 1.12 billion. Segment wise, value added-segment once again led the exports growth, up 11.6 per cent YoY to reach $ 826 million, while low value-added segment remained under pressure, declining 2.6 per cent YoY to $ 264 million.

On a cumulative basis, textile exports during 5MFY18 increased 7.6 per cent YoY to reach $ 5.51 billion largely supported by a recovery in final product prices. Going forward, we expect textile exports to grow by 7.5 per cent in FY18, where recent rupee depreciation coupled with approval of 50 per cent unconditional export subsidy is expected to drive exports growth.

Driven by the recovery in final product prices coupled with government support, textile exports gained 7.5 per cent YoY to reach $ 1.12 billion in November 17.

Category wise, value-added segment remained a key driver of exports growth, rising 11.6 per cent YoY to $ 826 million. In the value-added segment, all the key categories posted double-digit growth in knitwear, garment and bed-wear exports growing by 18 per cent YoY, 14.03 per cent YoY and 11.7 per cent YoY, respectively.

Failing to maintain recovering trend seen on October 17, low value-added exports once again declined 2.6 per cent YoY to $ 294 million primarily due to strong domestic demand for cotton yarn, leading to 13.7 per cent YoY decline in yarn exports. On a cumulative basis, textile exports during 5MFY18 increased 7.6 per cent YoY to reach $ 5.51 billion largely supported by the recovery in final product prices.