LONDON: Extreme heat and flooding could erase $65 billion in apparel export earnings from four Asian countries by 2030, as workers struggle under high temperatures and factories close, research from Schroders and Cornell University showed on Wednesday.
The study also mapped out the supply chains of six unidentified global apparel brands operating in the four countries studied – Bangladesh, Cambodia, Pakistan and Vietnam – and found all six would be hit materially. For one sample brand that could amount to 5 percent of annual group operating profits.
The findings should act as a wake-up call to both an apparel industry facing significant financial costs, and to investors confronted with sparse information on companies’ exposures, the report’s authors told Reuters.
“Among the suppliers and the buyers we talked to, not one had their eye on these two issues (heat and flooding),” said Jason Judd, executive director of Cornell Global Labor Institute.
“The climate response by the industry is all about mitigation, about emissions and recycling, and little or nothing with respect to flooding and heat,” Judd said.
Understanding climate-related physical risks to companies in a warming world is critical, but the process is in its infancy with few businesses disclosing enough information and few investors undertaking proper assessments.
“There is so little data on this ... There are some brands not disclosing the factory locations of their suppliers,” said Angus Bauer, Schroders’ head of sustainable investment research.
Bauer said Schroders, which manages more than 700 billion pounds ($874 billion) in assets, would increase engagement with companies over their disclosures and he called on firms to work with suppliers and policymakers to build adaptation strategies that consider the impact on workers.
Using projections, the researchers analyzed future heat and flooding levels to estimate what would happen under a “climate adaptive” scenario and a “high heat and flooding” scenario.
Under the second, workers would suffer more “heat stress,” with worker output declining as the wet-bulb globe temperature, which measures heat and humidity, rises.
Flooding will also force factories to close in the four countries, which account for 18 percent of global apparel exports and employ 10.6 million workers in apparel and footwear factories.
The overall fall in productivity would lead to a $65 billion shortfall in projected earnings between 2025 and 2030 – equivalent to a 22 percent decline – and 950,000 fewer jobs being created, the study found.
By 2050, lost export earnings would reach 68.6 percent and there would be 8.64 million fewer jobs.
Asia apparel hubs, including Pakistan, face $65 billion export hit from extreme weather
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Asia apparel hubs, including Pakistan, face $65 billion export hit from extreme weather
- Research from Schroders and Cornell University shows the apparel industry is not doing much about flooding and heat
- The study reveals the lost export earnings will reach 68.6 percent by 2050, with 8.64 million fewer jobs in the apparel sector
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
