Pakistan recorded a major milestone in its external trade performance as exports crossed the $3 billion mark for the first time in January 2026, while the country’s trade deficit narrowed sharply by 28.53% on a month-on-month basis. According to provisional data released by the Pakistan Bureau of Statistics (PBS), the trade deficit declined to $2.725 billion in January from $3.813 billion in December 2025, reflecting a strong improvement in monthly trade dynamics.
The significant narrowing of the trade gap was driven by a sharp surge in exports coupled with a notable decline in imports. Exports rose to $3.061 billion in January, registering a robust increase of 34.96% compared to the previous month. This marked the first time in Pakistan’s trade history that monthly exports surpassed the $3 billion threshold, signaling renewed momentum in outbound trade after months of pressure.
Imports, on the other hand, fell to $5.786 billion in January, declining by 4.85% month-on-month. The reduction in import payments played a key role in compressing the monthly trade deficit and easing short-term pressure on the country’s external accounts. The combined impact of higher exports and lower imports contributed to one of the sharpest monthly improvements in Pakistan’s trade balance in recent periods.
On a year-on-year basis, however, the improvement in the trade deficit was relatively modest. The deficit narrowed by 6.61% compared to January 2025, when it stood at $2.918 billion. Exports increased by 3.73% year-on-year from $2.951 billion, while imports declined by 1.41% from $5.869 billion over the same period. This mixed annual performance highlights that while January delivered a strong monthly turnaround, broader structural challenges remain in the trade sector.
Data for the cumulative period of July to January in fiscal year 2025-26 presents a more challenging picture. During the first seven months of FY26, Pakistan’s exports totaled $18.195 billion, reflecting a decline of 7.09% compared to the same period last year. In contrast, imports rose significantly by 9.42% year-on-year to $40.233 billion. As a result, the cumulative trade deficit widened to $22.038 billion, marking a sharp increase of 28.22% over the corresponding period of the previous fiscal year.
The widening cumulative trade gap underscores continued pressure on Pakistan’s balance of payments despite the encouraging monthly performance recorded in January. While the record-breaking export figure and contraction in imports provided short-term relief, the overall trend suggests that sustained growth in exports and effective import management remain critical for long-term external stability.
January’s data reflects improving momentum in exports, which could be attributed to better global demand conditions, currency adjustments, or improved competitiveness in certain sectors. However, the persistent rise in cumulative imports and the decline in exports over the broader fiscal period indicate that deeper structural reforms and diversification of export markets will be necessary to achieve durable improvement in the trade balance.
Overall, the January 2026 trade figures offer a cautiously optimistic signal for Pakistan’s external sector. The historic crossing of the $3 billion export mark represents a significant achievement, while the sharp monthly narrowing of the trade deficit provides temporary relief. At the same time, the cumulative data highlights the need for sustained policy focus to address long-standing trade imbalances and strengthen the country’s external economic position.
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