Textile Exports in Pakistan Likely to Decline in 2026

Pakistan’s textile sector earned $17.85 billion in exports in 2025, but rising costs, structural weaknesses, and global trade shifts threaten a decline in 2026. Experts urge policy clarity, market diversification, and energy cost rationalisation.

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Pakistan’s largest export-oriented sector showed modest improvement in 2025, earning $17.85 billion in exports during the first eleven months, compared to 515.43 billion in the same period of 2024. The growth, driven mainly by higher prices rather than volume, provided temporary relief after several years of slowdown. Stronger global demand, stable domestic production, and improved order inflows from traditional markets contributed to the sector’s performance.

Despite these gains, industry stakeholders highlight the absence of a comprehensive textile policy as a major missed opportunity. Associations representing the majority of SMEs were largely excluded from consultations, leaving long-standing issues such as energy pricing, taxation, financing costs, and productivity unaddressed. Globally, US protectionist policies and China’s diversion of textile products to Europe are intensifying competition, threatening Pakistan’s market share even in GSP Plus-preferred EU markets. Chinese firms entering Pakistan under CPEC 2 could further challenge local producers with integrated supply chains and lower costs.

Domestic challenges, including political instability, rising taxes, and energy prices, compound the threat. Stakeholders stress urgent policy support, product and market diversification, and cost rationalisation to prevent a decline in exports in 2026, safeguarding employment, foreign exchange, and economic stability.