KARACHI: The State Bank of Pakistan (SBP) has projected GDP growth between 3.25 and 4.25 per cent for FY26, based on improved macroeconomic indicators.

However, the textile sector has warned that high production costs and policy constraints are undermining its global competitiveness, despite the improving economic outlook.

Speaking at the annual meeting of the Pakistan Textile Council (PTC) on Tuesday, SBP Governor Jameel Ahmed highlighted key indicators supporting the growth forecast. These include a current account surplus in FY25, record remittances of $38bn, and a rise in SBP’s foreign exchange reserves to $14.5bn — bolstered by $7.8bn in purchases from the interbank market.

He noted that inflation had dropped to 3.2pc in June 2025, allowing the central bank to slash the policy rate from 22pc to 11pc over the year. Fiscal consolidation, reforms in exchange companies, and stable external debt levels, he said, have contributed to market confidence and overall stability.

Despite the optimistic outlook, the textile sector expressed concern over its ability to remain competitive globally. Industry leaders questioned the growth forecast — particularly the upper bound of 4.25pc — citing extensive flood damage to key crops, especially cotton, which is vital to the sector. Cotton-producing areas in Sindh remain at risk as floodwaters continue to spread across the region.

Textile Council urges EFS revival, cost cuts amid US tariffs on Indian exports

PTC Chairman Fawad Anwar said the macroeconomic improvements are not translating into relief for exporters. He pointed to the exclusion of essential raw materials from the Export Facilitation Scheme (EFS) and persistent structural barriers as key obstacles. “The global market is offering Pakistan a once-in-a-decade opportunity, especially after the US imposed a 50pc tariff on Indian textile exports, impacting $16bn worth of shipments,” Anwar said.

“But unless bold policy action is taken now, Pakistan may miss this critical opening.”He urged the government to urgently restore EFS access, reduce the cost of doing business, and implement long-term measures to help the textile sector capture greater global market share.

Published in Dawn, September 3rd, 2025