Pakistan trade gap swells as imports outpace exports

ISLAMABAD: Pakistan’s merchandise trade deficit widened about 20 per cent to $32 billion in the first 10 months of the current fiscal year, as import growth continued to outpace exports, data from the Pakistan Bureau of Statistics (PBS) showed.

During July-April FY2026, imports rose nearly 7 per cent to $57.2 billion, while exports fell more than 6 per cent to $25.2 billion, widening the overall imbalance, the PBS data said.

The trend persisted in April, when the monthly trade deficit increased nearly 4 per cent year-on-year to just over $4 billion. Exports rose about 14 per cent to $2.48 billion, but were outweighed by a 7.5 per cent rise in imports to $6.55 billion.

It said that Pakistan’s exports have remained under pressure since August 2025, with the exception of July, when shipments grew more than 16 per cent year-on-year.

Export earnings declined sharply in subsequent months, including a drop of over 20 per cent in December, followed by continued contractions in February and March.

Although exports showed a modest recovery in January and a stronger rebound in April, analysts said the gains were insufficient to offset rising import payments.

Trade analysts attribute the persistent deficit to higher demand for energy and industrial inputs, which has kept import volumes elevated.

In the services sector, the deficit narrowed about 6.7 per cent to $2.15 billion in July-March FY2026, as exports rose 17 per cent to $7.35 billion. Services imports increased nearly 11 per cent to $9.5 billion.

March saw a sharp improvement, with the services deficit narrowing significantly year-on-year, supported by higher export receipts and relatively stable imports.

Despite the improvement in services trade, Pakistan’s external accounts remain under pressure, with elevated import levels and weaker export growth weighing on the balance.

Analysts also warned that ongoing tensions in the Strait of Hormuz and broader Middle East conflict could further disrupt trade routes, increase shipping costs and dampen demand in key export markets.

The government has introduced measures in recent months, including reductions in energy tariffs, aimed at supporting exporters, but their impact has yet to fully materialise.