Cotton Crisis Will Further Weaken Pakistan Economy

Pakistan’s economy has been in the flux for many years and the Covid pandemic dealt it a devastating blow. Pakistan has long been a cotton-textile dependent economy and it looks like a crisis is brewing in the cotton sector.

The 2020-21 cotton crop has plummeted with the production not being 10 m bales, instead of the normal average of 12 mn bales but rather 6 million. This means the country will need to import more cotton to the tune of almost $ 3billion in 2021.”

According to an Editorial in Dawn, this is not “a one-off event.” The cotton harvest “suffered setbacks in the previous two years at least, but the scale of the declines is accelerating.” If “diminishing harvests become the new normal, it will have a very damaging effect on the external account.” As a textile export dependent economy if “cotton is also added to the list of imported raw materials, it will mean even greater loss of competitiveness by the textile sector, which is already struggling to compete with its counterparts in Bangladesh and Vietnam.”

The Editorial called on the government to tackle two key problems: “First the immediate situation that has arisen from the collapse of the cotton harvest, that is leading to rising prices, which could prompt exporters to demand even greater concessions from the government to maintain the momentum behind exports. The second is the longer-term stagnation and erosion of the country’s cotton output.”

Author: Ahsan Kureshi

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Author: Ahsan Kureshi