Pakistan’s trade deficit with Gulf partner countries increased by 2.61 per cent to $3.450 billion during the first two months of fiscal year 2026-27, compared with $3.362 billion recorded during the same period a year earlier. The widening gap came as imports from Gulf markets grew faster than Pakistan’s exports, according to data compiled by the State Bank of Pakistan. The latest figures highlight the continued importance of Gulf countries in Pakistan’s external trade, particularly because of the country’s dependence on energy and raw material imports from the region. While export proceeds recorded growth in several markets, the increase was not sufficient to offset the higher import bill from key Gulf trading partners.
Pakistan’s exports to some Gulf and Middle Eastern markets showed moderate improvement during the July-August period. Export proceeds to Jordan increased by 34.7 per cent, while exports to the United Arab Emirates rose by 13.6 per cent and those to Oman increased by 5.9 per cent. At the same time, export performance weakened in Saudi Arabia, Qatar, Kuwait and Bahrain. The declines in these markets have affected the overall balance of trade with the Gulf region, particularly as import demand remained elevated in several of these countries. The available trade data indicates that imports from Qatar increased by 41.9 per cent, while imports from Kuwait, Bahrain and Saudi Arabia rose by 27.6 per cent, 39.4 per cent and 14.7 per cent, respectively. Imports declined only from the United Arab Emirates and Oman during the period under review.
The country-level figures show that Pakistan recorded trade deficits with Saudi Arabia, Qatar, Kuwait and Bahrain during the first two months of FY27. The deficit with the United Arab Emirates narrowed slightly, while trade with Jordan and Oman remained comparatively balanced. The pattern reflects the different composition of Pakistan’s trade with individual Gulf economies. Energy products and raw materials remain a significant component of imports from the region, while Pakistan’s exports include a range of goods whose performance has been affected by changing regional conditions. Since February 28, disruptions linked to conflict in the Middle East have also affected Pakistan’s trade flows, with exports to several Gulf destinations coming under pressure while imports from the region increased.
The data also indicates that August marked the sixth consecutive month of contraction in some export flows following the decline that began in March. This trend points to the sensitivity of Pakistan’s external trade to geopolitical developments and disruptions along important energy and transportation corridors. The Gulf remains particularly significant for Pakistan because of its role as a source of petroleum and other essential inputs. The country continues to rely heavily on energy imports from the United Arab Emirates and Saudi Arabia, which together accounted for around 90 per cent of Pakistan’s energy imports from the region. Qatar, Kuwait, Oman, Jordan and Bahrain also contribute to Pakistan’s regional trade, although their shares remain comparatively smaller.
Pakistan’s broader trade figures with the Middle East showed some improvement in exports during July and August FY27. Exports to the region increased by 7.4 per cent to $550.045 million, compared with $512.293 million during the corresponding period of the previous fiscal year. However, the improvement in exports was accompanied by a larger import requirement. Imports from the region increased by 3.2 per cent to $4 billion during the first two months of FY27, compared with $3.874 billion in the same period a year earlier. On a full-year basis, Pakistan’s exports to the Middle East declined by 2 per cent in FY26 to $3.093 billion from $3.152 billion in FY25. Imports from the region decreased by 4 per cent during FY26 to $16.413 billion, compared with $17.097 billion a year earlier.
Saudi Arabia remained one of the major contributors to the widening trade imbalance. Pakistan’s exports to Saudi Arabia declined by 1.7 per cent during the first two months of FY27 compared with the same period last year. In contrast, imports from Saudi Arabia increased by 14.7 per cent. The rise in imports was linked particularly to Pakistan’s demand for oil and other goods, resulting in a wider bilateral trade deficit. The contrasting movement in exports and imports demonstrates the pressure created when demand for essential imports increases while export receipts from the same market weaken.
Trade with the United Arab Emirates followed a different pattern. Pakistan’s exports to the UAE increased by 13.6 per cent during the first two months of FY27, supported by higher export proceeds from markets including Abu Dhabi, Ajman and Fujairah. Meanwhile, imports from the UAE declined by around 1 per cent, mainly because of lower petroleum and commodity inflows. The combination of stronger exports and reduced imports helped narrow Pakistan’s trade imbalance with the UAE during the period.
Qatar recorded another significant shift in Pakistan’s trade position. Exports to Qatar declined by 16.5 per cent during the first two months of FY27, while imports from the country surged by 41.9 per cent. The increase in imports reflects higher energy-related purchases and contributed to a wider trade deficit with Qatar. The latest figures therefore show that Pakistan’s trade position across Gulf markets is being shaped by a combination of export performance, energy requirements, commodity demand and regional geopolitical developments, with the overall deficit reaching $3.450 billion in the first two months of FY27.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.