Pakistan’s external account position has come under renewed pressure after official data showed a sharp widening of the merchandise trade deficit during the first ten months of the current fiscal year, underscoring persistent structural imbalances in the economy.
According to figures released by the Pakistan Bureau of Statistics, the trade deficit expanded by 20% to approximately $32 billion in July–April FY2026, driven primarily by rising imports and a continued decline in export earnings.
Imports increased nearly 7% year-on-year to $57.2 billion, while exports fell more than 6% to $25.2 billion, widening the already significant gap between the two. Economists warn that the trend reflects sustained pressure on Pakistan’s external sector, with implications for foreign exchange reserves and currency stability.
On a monthly basis, April 2026 data showed the deficit widening by nearly 4% compared to the same month last year, reaching just over $4 billion. Exports rose 14% to $2.48 billion, but were significantly overshadowed by imports, which increased 7.5% to $6.55 billion.
The services sector provided limited relief. Between July and March FY2026, the services trade deficit narrowed by 6.7% to $2.15 billion. Services exports rose 17% to $7.35 billion, while imports increased nearly 11% to $9.5 billion, keeping the sector in negative territory despite some export momentum.
A notable short-term improvement was recorded in March 2026, when the monthly services deficit fell sharply by 81% year-on-year to just $22.9 million. Services exports grew 16% to $903 million, while imports edged up 3% to $925 million, indicating temporary easing in external services pressures.
Despite isolated improvements in services trade, analysts say the broader external account remains under strain. Export growth remains subdued, while import demand continues to be driven by energy needs, industrial inputs, and consumption requirements.
Economists caution that the widening gap may increase reliance on external financing, adding further pressure on foreign exchange reserves and limiting policy space for macroeconomic stability.