Pakistan’s trade deficit widened significantly by 28.22% year-on-year to $22.04 billion during the first seven months of the current fiscal year (7MFY26), according to data released by the Pakistan Bureau of Statistics (PBS) on Monday. The increase reflects mounting pressure on the country’s external accounts amid rising imports and a contraction in exports over the period.
During July to January of FY26, Pakistan’s trade balance, which represents the gap between exports and imports, deteriorated from a deficit of $17.19 billion recorded in the same period of the previous fiscal year (7MFY25). The expansion in the deficit highlights persistent structural challenges in the trade sector, despite some encouraging monthly improvements seen recently.
Exports during the first seven months of FY26 stood at $18.20 billion, registering a decline of 7.1% compared to $19.58 billion in the corresponding period last year. The fall in exports indicates weaker performance across key sectors, underscoring the need for greater diversification, competitiveness, and value addition to support sustainable export growth.
In contrast, imports surged to $40.23 billion in 7MFY26, marking an increase of 9.42% from $36.77 billion recorded in the same period of FY25. The rise in import payments was largely driven by higher demand for energy, raw materials, and intermediate goods, adding pressure to the country’s balance of payments position.
Despite the challenging cumulative figures, January 2026 provided some relief on a monthly basis. Pakistan’s exports crossed the $3 billion mark during the month, reaching $3.06 billion, reflecting a year-on-year increase of 3.73% compared to $2.95 billion recorded in January 2025. This marked an important milestone for the country’s export sector and signaled improving momentum in outbound trade.
Imports in January 2026 stood at $5.79 billion, showing a marginal decline of 1.41% from $5.87 billion in the same month last year. The combination of higher exports and lower imports helped reduce the monthly trade deficit to $2.72 billion, down 6.61% compared to $2.92 billion in January 2025.
On a month-on-month basis, the improvement was even more pronounced. The trade deficit narrowed sharply by 28.53% compared to $3.81 billion recorded in December 2025, reflecting a significant short-term easing of external pressures.
While January’s performance offers a cautiously optimistic signal, the broader data for 7MFY26 underscores ongoing vulnerabilities in Pakistan’s trade dynamics. Sustained export growth, effective import management, and structural reforms remain critical to achieving long-term external stability and reducing dependence on external financing.
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