Pakistan’s merchandise trade gap has increased by more than $2 billion in the first four months of FY2026–27, highlighting persistent external-sector pressure despite an 8.52% rise in exports.
Pakistan’s merchandise trade deficit widened 15.97% to $14.63 billion during July–October 2026, compared with $12.61 billion a year earlier, according to the Pakistan Bureau of Statistics (PBS).
The deterioration reflects imports growing faster than exports, raising concerns about the sustainability of Pakistan’s export-led growth strategy.
Imports Rise Faster Than Exports
During the first four months of FY2026–27, exports increased 8.52% to $11.34 billion, compared with $10.45 billion in the corresponding period last year.
However, imports grew 12.59% to $25.96 billion, up from $23.06 billion.
Consequently, the trade deficit expanded by approximately $2.01 billion, with merchandise imports exceeding exports by more than two times.
The figures indicate that export growth, although positive, remains insufficient to offset the expanding import bill.
October Shows Further Deterioration
The monthly figures reveal a widening imbalance.
Pakistan’s October exports reached $2.93 billion, increasing just 2.84% year on year and 0.21% from September.
Imports, meanwhile, surged 11.81% annually to $6.81 billion, increasing 5.72% month on month.
As a result, October’s trade deficit climbed 19.70% to $3.88 billion, compared with $3.24 billion in October 2025.
Textile Exports Face Competitive Pressures
The widening trade deficit underscores Pakistan’s need to accelerate value-added exports, particularly textiles and apparel. Manufacturers continue to face high energy costs, expensive financing, international competition and logistics disruptions.
However, the aggregate trade figures do not identify which product categories drove import growth or how much textiles contributed to export expansion.
Imported raw materials and machinery can also support export production, making the composition of imports commercially important.
The next test will be whether Pakistan can sustain export growth while moderating non-essential imports. November trade figures and sector-wise export performance will provide clearer evidence of progress towards reducing the external trade imbalance.
