Pakistan’s trade deficit increased by 15.13% during the first quarter of fiscal year 2026-27, prompting the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to raise concerns about potential pressure on the country’s foreign exchange reserves. According to the latest data from the Pakistan Bureau of Statistics (PBS) cited by FPCCI President Atif Ikram Sheikh, the country’s trade deficit reached $10.792 billion during July to September 2026, compared with $9.374 billion recorded during the corresponding period of the previous year. The widening gap between exports and imports has raised concerns over the external sector and the potential implications for Pakistan’s balance of payments position.
The trade deficit also increased during September 2026, reaching $3.55 billion compared with $3.35 billion in September 2025. This represents a 6.15% increase on a year-on-year basis and indicates that the pressure on the trade balance continued into the third month of the fiscal year. The latest figures have drawn attention to the relationship between import demand, export performance and the availability of foreign exchange, particularly as Pakistan seeks to maintain external stability while supporting economic and industrial activity.
Sheikh attributed the widening trade gap to the high cost of doing business in Pakistan, arguing that elevated operating expenses are affecting the competitiveness of domestic manufacturers compared with regional competitors. He identified high interest rates, electricity capacity charges and petroleum levies among the factors creating additional costs for businesses. According to the FPCCI president, these pressures can affect industrial productivity and value addition by increasing the expenses associated with manufacturing and limiting the ability of local producers to compete in international markets.
The FPCCI president also warned that continued dependence on imports to meet domestic demand could place additional pressure on the national exchequer and increase balance of payments risks if structural measures are not introduced. A sustained increase in imports without corresponding growth in export earnings can raise demand for foreign exchange and place greater pressure on external financing requirements. For Pakistan, where maintaining adequate foreign exchange reserves remains important for meeting external obligations and supporting import requirements, developments in the trade balance are closely linked with broader economic stability.
To support the export targets for FY2026-27 and prevent industrial stagnation, FPCCI has urged the Ministry of Finance and the State Bank of Pakistan to reduce the policy rate to single digits. Sheikh said lower borrowing costs would provide manufacturers with more affordable working capital and could help businesses manage financing expenses while maintaining or expanding production. The demand comes as the business community continues to focus on the cost of financing as one of the factors influencing industrial activity, investment decisions and the ability of manufacturers to compete in domestic and international markets.
FPCCI has also called for the immediate rationalization of electricity and gas tariffs, with the objective of bringing energy costs closer to levels offered by regional competitors. Energy expenses represent a significant component of operating costs for many industrial sectors, and the federation believes that reducing these costs could improve the competitiveness of Pakistani manufacturers. The organization has linked energy pricing with broader efforts to increase industrial productivity, strengthen value addition and support the country’s export ambitions during the current fiscal year.
In addition to monetary and energy-related measures, Sheikh called for targeted relief on inland logistics costs. According to the FPCCI president, reducing domestic supply chain expenses could help manufacturers lower overall operating costs and improve their competitive position. Inland transportation and logistics expenses affect the movement of raw materials and finished products across the country, making them an important component of the cost structure for businesses involved in manufacturing and trade.
The latest trade deficit figures have placed renewed attention on the need to strengthen Pakistan’s export capacity while managing import demand and production costs. FPCCI’s recommendations focus on monetary policy, energy tariffs and logistics expenses as areas where businesses believe changes could support industrial activity and export performance. With the trade deficit reaching $10.792 billion in the first quarter of FY2026-27, the federation has emphasized the need for measures that can improve manufacturing competitiveness, support exports and reduce potential pressure on foreign exchange reserves.
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