Pakistan maintained broad stability in its external account during FY2026 as strong workers’ remittances, continued foreign direct investment and resilient services exports helped offset the impact of a wider trade deficit. Although imports increased at a faster pace than exports during the fiscal year, inflows from overseas Pakistanis and foreign investors supported the country’s overall external position.
The current account recorded a deficit of US$649 million in June 2026, bringing the cumulative deficit for FY2026 to a modest US$139 million. Despite higher import payments during the year, the overall current account remained close to balance, reflecting improved external sector performance compared with previous years.
Exports of goods and services remained broadly stable during FY2026. Combined exports reached US$40.9 billion, slightly higher than the US$40.8 billion recorded during the previous fiscal year. Merchandise exports contributed US$30.8 billion, while services exports reached US$10.0 billion, representing a strong year-on-year increase of 18.7 percent. Growth in services exports continued to support Pakistan’s external earnings despite changing global trade conditions.
Imports, however, increased at a faster pace than exports during the fiscal year. Total imports of goods and services reached US$76.4 billion compared with US$70.4 billion during FY2025. Goods imports accounted for US$64.5 billion of the total, resulting in a wider combined goods and services trade deficit of US$35.5 billion compared with US$29.6 billion in the previous year.
According to data released by the Pakistan Bureau of Statistics, several export categories recorded strong growth during FY2026. Raw cotton exports increased by 199.2 percent, while cotton yarn exports rose by 12.4 percent. Petroleum products recorded growth of 54.8 percent, and sports goods exports increased by 10.1 percent, reflecting stronger performance across selected manufacturing and agricultural sectors.
On the import side, the transport sector registered the largest increase during FY2026, with imports rising by 66.4 percent compared with the previous fiscal year. Higher transport-related imports contributed significantly to the overall increase in Pakistan’s import bill during the review period.
Workers’ remittances continued to provide strong support to the country’s external account. During June 2026 alone, overseas Pakistanis sent US$3.5 billion, representing a 2.0 percent increase compared with the same month last year. On a cumulative basis, remittances reached US$41.6 billion during FY2026, reflecting annual growth of 8.6 percent and remaining one of the country’s largest sources of foreign exchange.
Saudi Arabia remained the largest source of workers’ remittances during June 2026, contributing US$829.6 million, equivalent to approximately 24 percent of total monthly inflows. The United Arab Emirates followed closely with remittances of US$792.2 million, representing a 23 percent share, while the United Kingdom contributed US$514.9 million during the month.
Foreign direct investment also remained positive throughout FY2026. Total gross FDI inflows reached US$3.6 billion, while net foreign direct investment stood at US$1.6 billion. China remained the largest investor during the fiscal year with inflows of US$862.0 million, followed by Hong Kong with US$339.4 million and the United Arab Emirates with US$235.9 million.
Sector-wise, the power sector attracted the highest volume of foreign direct investment at US$958.3 million, while financial services received US$805.5 million. In contrast, foreign portfolio investment recorded net outflows during the year, with private portfolio investment posting outflows of US$594.8 million and public portfolio investment declining by US$591.4 million.
Pakistan’s foreign exchange reserves also remained at a comfortable level. As of July 17, 2026, total foreign exchange reserves stood at US$22.7 billion, including US$17.3 billion held by the State Bank of Pakistan. The reserve position, combined with stable current account performance, stronger remittance inflows and continued foreign investment, reflects a relatively balanced external sector despite higher import costs and a wider trade deficit during FY2026.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.