Pakistan’s external account position has seen a notable improvement, driven by strong growth in both exports and remittances, despite an increase in imports. From July to November 2024 (FY2025), the country’s current account posted a surplus of $944 million, a remarkable reversal from the deficit of $1.676 billion recorded during the same period in the previous year. The positive trend continued in November 2024, when the current account surplus reached $729 million, compared to a deficit of $148 million in November 2023. This marks the fourth consecutive month of a current account surplus, following a $346 million surplus in October 2024.
A key driver of this positive shift has been the robust growth in goods exports, which rose by 7.4% during the first five months of FY2025, reaching $13.3 billion compared to $12.4 billion in the same period last year. However, imports also increased, rising by 8.3% to $23.0 billion, up from $21.2 billion in 2023. As a result, Pakistan’s goods trade deficit widened slightly to $9.7 billion, compared to $8.8 billion last year. Despite this, the overall trade balance has remained steady, reflecting resilience in export performance.
Notably, several export commodities showed impressive growth, including rice, which saw a 35.4% increase, fruits and vegetables, up by 12.2%, and sugar, which surged by an astounding 834%. Other strong performers included knitwear (up 18.4%), bedwear (up 15.1%), readymade garments (up 23.1%), chemicals and pharmaceutical products (up 1.8%), and cement (up 18.9%).
On the import side, palm oil, petroleum crude, liquefied natural gas, and raw cotton registered increases. Palm oil imports grew by 7.1%, petroleum crude by 5.4%, and LNG by 5.2%. Raw cotton imports saw a significant rise of 104%, while fertilizer imports increased by 57%. Machinery imports also rose by 12.8%, reflecting ongoing demand for industrial inputs.
The services sector also contributed positively, with exports reaching $3.3 billion, a 7.7% increase, while imports grew by 2.8% to $4.4 billion, resulting in a service trade deficit of $1.1 billion, which was lower than the $1.3 billion recorded last year. The IT sector stood out, with exports growing by an impressive 32.7% to $1.5 billion compared to $1.2 billion last year.
Foreign Direct Investment (FDI) into Pakistan increased by 31.3% to $1,124 million during the period, with China contributing the largest share of $469 million (41.7%). The power sector attracted the bulk of the FDI, receiving $455 million, followed by oil and gas exploration with $125 million. At the same time, Foreign Portfolio Investment (FPI) showed mixed results, with private sector FPI recording a net outflow of $156 million, while public FPI posted a net inflow of $305 million.
Pakistan’s remittances, another crucial source of foreign exchange, rose sharply by 33.6%, totaling $14.8 billion during the first five months of FY2025, compared to $11.1 billion in the same period last year. The largest share of these remittances came from Saudi Arabia, reflecting the continued importance of overseas Pakistani workers in sustaining the country’s economy.
As of December 20, 2024, Pakistan’s total liquid foreign exchange reserves stood at $16.4 billion, with the State Bank of Pakistan holding $11.9 billion. This improvement in reserves, combined with the strong performance in exports and remittances, has bolstered the country’s economic stability and provided a solid foundation for continued growth.