Pakistan’s trade deficit expanded significantly during the first eight months of fiscal year 2026, highlighting persistent pressure on the country’s external sector amid declining exports and elevated import levels. Latest figures released by the Pakistan Bureau of Statistics (PBS) and compiled by Arif Habib Limited show a widening imbalance between imports and exports despite some monthly moderation.
According to the data, Pakistan’s trade deficit reached $25.042 billion during July–February FY26, marking a sharp 25% increase compared with the same period last year. The widening gap reflects weakening export performance alongside continued reliance on imported goods, raising concerns about foreign exchange stability and economic sustainability.
Exports during the eight-month period totaled $20.462 billion, representing a decline of 7.3% from $22.073 billion recorded in the corresponding period of FY25. The drop indicates slowing external demand, competitiveness challenges, and pressure on key export sectors that traditionally support Pakistan’s foreign earnings.
In contrast, imports continued to rise despite signs of slowing momentum. Total imports stood at $45.504 billion during 8MFY26, showing an increase of 8.1% compared with $42.110 billion in the same period last year. Higher energy costs, industrial raw material needs, and consumer demand remained major drivers behind import growth.
On a monthly basis, Pakistan recorded a trade deficit of $2.981 billion in February 2026. Exports for the month were reported at $2.272 billion, declining 8.8% year on year and falling sharply by 25.6% compared with January’s $3.055 billion. The steep monthly drop signals a notable contraction in external shipments.
Imports during February reached $5.253 billion. While imports decreased slightly by 1.6% compared to February 2025, they dropped more noticeably by 9.5% from January 2026 levels of $5.805 billion. This decline suggests some easing in domestic demand and tighter import management measures.
Trend data indicates that although imports have moderated from recent highs, they continue to exceed exports by a wide margin. Economists warn that the persistent imbalance could maintain pressure on Pakistan’s current account and foreign exchange reserves if export growth does not recover in the coming months.
Analysts believe improving export diversification, boosting industrial productivity, and stabilizing global demand will be crucial for narrowing the trade gap. Without structural improvements, Pakistan may continue facing external financing challenges and currency pressures throughout FY26.
