Pakistan’s external trade imbalance has deepened significantly, with the country’s merchandise trade deficit widening by nearly 20 per cent to $32 billion during the first ten months of the current fiscal year, according to data released by the Pakistan Bureau of Statistics.
Between July and April FY2026, imports climbed to $57.2 billion, reflecting a growth of almost 7 per cent, while exports declined by more than 6 per cent to $25.2 billion. This widening gap underscores a persistent structural challenge, where import demand continues to outpace export performance.
The pressure remained evident in April, when the monthly trade deficit rose by nearly 4 per cent year-on-year, crossing the $4 billion mark. Although exports posted a notable increase of around 14 per cent to $2.48 billion, the gain was overshadowed by a 7.5 per cent rise in imports, which reached $6.55 billion.
Export performance has faced consistent headwinds since August 2025. Apart from a strong showing in July, when shipments surged by over 16 per cent year-on-year, subsequent months saw sharp declines. December recorded a drop exceeding 20 per cent, followed by continued contractions in February and March.
While there were signs of recovery in January and a more visible rebound in April, analysts suggest these improvements remain insufficient to counterbalance the sustained rise in import payments.
The ongoing deficit is largely attributed to elevated demand for energy resources and industrial inputs, both of which are essential for maintaining economic activity but continue to strain the import bill.
In contrast, the services sector showed some resilience. The services trade deficit narrowed by approximately 6.7 per cent to $2.15 billion during July-March FY2026. This improvement was driven by a 17 per cent increase in services exports, which reached $7.35 billion, despite an 11 per cent rise in imports to $9.5 billion.
March, in particular, saw a notable improvement, with a significant year-on-year reduction in the services deficit supported by stronger export receipts and relatively stable import levels.
Despite this positive movement in services, Pakistan’s overall external account remains under pressure. High import volumes combined with weaker export growth continue to weigh heavily on the country’s balance of payments.
Analysts have also raised concerns about external risks. Ongoing tensions in the Strait of Hormuz and the broader Middle East conflict could disrupt key trade routes, increase shipping costs, and reduce demand in critical export markets.
The government has attempted to provide relief through measures such as reductions in energy tariffs aimed at supporting exporters. However, the full impact of these policies has yet to materialize, leaving the trade outlook uncertain in the near term.
