Pakistan’s current account returned to surplus in January 2026, posting a positive balance of $121 million compared to a deficit of $265 million in December 2025, according to fresh data released by the State Bank of Pakistan. The month-on-month turnaround reflects a sharp improvement in the country’s external account position after ending 2025 on a weaker note.
The December deficit had highlighted renewed pressure on the external sector, driven by higher import payments and seasonal demand factors. The move back into surplus in January suggests a moderation in external outflows, an improvement in export receipts or remittance inflows, or a combination of these factors that helped rebalance the account. While the data does not yet signal a structural shift, it does indicate short-term stabilization in a key macroeconomic indicator closely tracked by investors and policymakers.
Pakistan’s external account has experienced considerable volatility over the past year. During mid-2024, the country recorded multiple months of deficits before shifting into surplus territory toward the latter part of that year. March 2025 stood out as a particularly strong month, reflecting improved inflows and tighter import management. However, the trend did not remain consistent. Deficits resurfaced in the middle and final months of 2025, underscoring the fragile nature of the country’s external balance.
The broader cumulative picture for the current fiscal year remains under pressure. In the first seven months of FY26, covering July through January, Pakistan recorded a current account deficit of $1.07 billion. This marks a significant reversal compared to the same period of FY25, when the country had posted a surplus of $560 million. The shift highlights a weaker external position relative to last year, even though individual months such as January have shown improvement.
The current account is a central component of a country’s balance of payments framework, measuring the net flow of goods, services, primary income, and secondary income. A surplus indicates that foreign exchange inflows exceed outflows, helping to strengthen reserves and support currency stability. Conversely, a deficit signals greater external financing needs and can exert pressure on foreign exchange reserves and exchange rate management.
January’s surplus is expected to offer limited relief to policymakers tasked with managing Pakistan’s foreign exchange reserves and exchange rate dynamics. A positive reading can improve short-term market sentiment, particularly in a landscape where external financing conditions remain tight and global financial markets are sensitive to emerging market vulnerabilities. However, the cumulative deficit for FY26 indicates that sustaining monthly surpluses will be critical to rebuilding confidence in the external sector.
Market participants and economic analysts are likely to monitor the coming months closely to determine whether January’s improvement marks the beginning of a more stable trajectory or merely reflects temporary adjustments in trade and remittance flows. Given the pattern of sharp month-to-month swings over the past year, consistency will be key.
For now, the January data provides a measure of breathing space. Whether that space translates into durable external stability will depend on export performance, remittance inflows, import discipline, and broader macroeconomic management in the remainder of the fiscal year.
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