By Azam Tariq

Pakistan's textile sector returned to growth in FY2025-26, providing a boost to industrial activity and export-oriented manufacturing after facing significant challenges in recent years, according to the Pakistan Economic Survey 2025-26 released by the Ministry of Finance.

The survey highlights the textile industry as a major contributor to the recovery of large-scale manufacturing, which grew by 6.11% during the fiscal year. As the country's largest manufacturing industry and leading export sector, the performance of textiles remains closely linked to industrial growth, employment generation and foreign exchange earnings.

According to the survey, the textile sector growth remained moderate at 0.7 percent during July-March FY 2026, compared to a growth of 2.5 percent in the same

period last year. The recovery was supported by improved availability of raw materials, easing inflationary pressures, exchange rate stability and stronger demand from domestic and international markets.

The Ministry of Finance notes that the improvement reflects broader stabilization in the economy, which helped manufacturers restore production levels and improve operational efficiency.

The survey indicates that the textile industry benefited from better cotton availability and stronger performance across various segments of the value chain. Increased activity in spinning, weaving, garment manufacturing and other textile-related industries contributed to overall sectoral growth.

The wearing apparel segment emerged as one of the strongest performers within manufacturing, registering growth of 8.6% during FY2025-26. The survey notes that apparel production benefited from increasing demand in export markets and continued investment in value-added textile products.

Pakistan's textile industry remains one of the country's largest employers and a major source of industrial jobs. The sector supports millions of workers directly and indirectly through a wide network of suppliers, transporters, exporters and service providers.

According to the survey, textiles continue to account for the largest share of Pakistan's merchandise exports, making the industry's performance critical for the country's external sector.

The recovery comes as Pakistan's overall export sector seeks to improve competitiveness in international markets through product diversification, technological upgrades and greater emphasis on value addition.

The survey notes that exchange rate stability played an important role in supporting industrial recovery during FY2025-26. A more stable currency environment enabled exporters to plan production and manage costs with greater certainty.

Improved macroeconomic conditions also supported the sector. Inflation moderated significantly compared with previous years, helping reduce cost pressures faced by manufacturers.

The Ministry of Finance highlights that the broader industrial sector recorded growth of 3.51% during FY2025-26, while manufacturing as a whole expanded by 6.61%. The recovery in textiles contributed significantly to these gains.

The survey also points to growing investment activity within the economy. Private investment increased by 12.8% during the fiscal year, creating a more supportive environment for industrial expansion and modernization.

Textiles continue to play an important role in generating foreign exchange earnings and supporting the country's balance of payments position. Alongside information technology and other export sectors, textile exports remain a key source of external receipts.

According to the survey, efforts to improve industrial competitiveness remain ongoing. Policy measures aimed at enhancing productivity, supporting exports and improving the business environment are expected to further strengthen manufacturing performance.

The report notes that global market conditions remain challenging, with competition from regional exporters and changing demand patterns continuing to influence international trade.

Nevertheless, the return to positive growth marks an important development for Pakistan's largest manufacturing industry after a period of slowdown and adjustment.

Credit: INP-WealthPk