Coronavirus: Pakistan's Exports Crash Amid Global Health Crisis
Sourcing Journal: “Most clients have either cancelled or put orders on hold...That would have huge ramifications and losses, and the fear is that most small factories may shut, whereas the mid and big factories will have huge financial liabilities and losses.” “Ninety-five percent of clients have either cancelled, put on hold or given new delivery dates ranging from 4-6 weeks delay to about 8-10 months,” Schlossman said. “That is how huge the holding period and losses would be for the factories.”
“All over Pakistan it’s a complete lockdown in all the provinces everywhere,” Hafiz Mustanser Ahmed, managing director of Lahore-based factory U.S. Apparel and Textiles, told Sourcing Journal last week. U.S. Apparel & Textiles, which typically produces 100,000 garments a day, is seeing “huge, huge” order cancellations, Ahmed said.
“The transportation when it comes to taking the employees to the factories or the public transportation, it’s all 100 percent closed. All the factories are closed.” For now, moving goods back and forth between the ports and Lahore, Pakistan’s second-biggest textile manufacturing hub after Karachi, is still allowed, but there simply aren’t many goods to move, said Ahmed, whose factory produces denim bottoms for Levi’s, Target, H&M, J.Crew, Primark and Costco, to name a few.
Other Asian garment exporting nations face a similar situation. Bangladesh has issued stay-at-home orders and India has ordered a 21-day nationwide lock-down. The difference is that Pakistan exports had just begun to recover when the COVID-19 global pandemic struck. Now demand for apparel in the western markets is not likely to materialize for at least a month or two. Meanwhile, job losses in Pakistan are almost certain. A prolonged slump in the west will spell disaster for Pakistan's exports and delay the nation's economic recovery.
Pakistan's service economy will also suffer in a prolonged lock-down. Service sector accounts for 50% of the world GDP and 54% of Pakistan's GDP. Social distancing will significantly impact the services, particularly retail, restaurants, travel, transport and education sectors. Imran Khan has expressed fear that the pandemic will devastate the economies of developing countries. “My worry is poverty and hunger," Khan said. "The world community has to think of some sort of a debt write-off for countries like us, which are very vulnerable, at least that will help us in coping with (the coronavirus).”
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