Pakistan ended the fiscal year 2025-26 with an external current account deficit of $139 million, marking a complete reversal from the $1.838 billion surplus recorded during the preceding fiscal year, official data released by the State Bank of Pakistan shows. The full year deficit represented roughly 0.03 percent of national gross domestic product, compared to a surplus equal to 0.45 percent of gross domestic product during fiscal year 2024-25.
The shift into negative territory was primarily driven by performance in the final month of the fiscal year. In June 2026, the external account registered a single month shortfall of $649 million, representing the largest monthly deficit recorded across the entire twelve month period. The June figure marked a sharp departure from the $500 million surplus generated in May 2026 and contrasted with the $220 million surplus posted during June of the prior year.
Throughout fiscal year 2025-26, external balances experienced notable volatility across individual quarters. The fiscal year opened under pressure, recording sequential deficits of $737 million during the first quarter spanning July to September and $624 million during the second quarter spanning October to December. High inflows during the third quarter from January to March provided brief relief by generating a $1.647 billion surplus. However, the fourth quarter returned to negative ground, posting a deficit of $425 million before the year concluded.
A major structural catalyst behind the overall annual deterioration was a 25.4 percent expansion in the merchandise trade deficit, which rose to $33.623 billion from $26.803 billion in fiscal year 2024-25. Total goods exports contracted by 4.64 percent down to $30.843 billion, while merchandise imports surged 8.99 percent to reach $64.466 billion over the course of the year.
In contrast to merchandise trade, the service sector delivered stronger figures that helped cushion the overall trade impact. Exports of services grew 18.75 percent to hit $10.034 billion, outpacing a 5.66 percent rise in service imports, which reached $11.925 billion. Consequently, the service trade deficit contracted by approximately 33 percent, shrinking from $2.836 billion down to $1.891 billion.
Overseas worker remittances served as a key stabilizing buffer for the external account, rising 8.58 percent to reach $41.585 billion compared to $38.300 billion in fiscal year 2024-25. This helped expand the net secondary income surplus to $43.813 billion from $40.315 billion. Additionally, the primary income deficit registered a modest improvement, narrowing to $8.438 billion from $8.838 billion in the prior fiscal year.
Looking at June isolated breakdown, goods exports stood at $2.595 billion against merchandise imports of $6.147 billion, producing a monthly trade gap of $3.552 billion. Services recorded a minor monthly surplus of $25 million on exports of $956 million and imports of $931 million. However, an $819 million primary income deficit outweighed the monthly secondary income surplus of $3.697 billion, pulling the final current account balance into a monthly deficit.
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