KARACHI: Pakistan’s trade deficit with Gulf nations widened 28.4 percent to $1.4 billion in July, the first month of the current fiscal year, driven by rising imports from the oil-rich region, State Bank of Pakistan (SBP) data showed this week.

Last year in July, the gap with the six-member Gulf Cooperation Council (GCC) — Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Oman and Bahrain — had stood at $1.09 billion.

This time around, exports to the bloc fell 12.5 percent year-on-year to $277.3 million, while imports rose 19 percent to $1.68 billion.

“It seems highly likely that Pakistan’s trade deficit is widening on the back of our increasing energy requirements that the country is importing from the Gulf region,” said Shankar Talreja, head of research at Karachi-based

Topline Securities Limited. “We have been importing our energy requirements and to some extent our chemical requirements from Gulf countries, while our exports to these nations are quite limited.”

Pakistan has continued to rely heavily on petroleum supplies from GCC states. Its imports from the bloc totaled $17.9 billion in FY2024-25, nearly matching earnings from the country’s textile exports. In return, Pakistan exported $3.79 billion worth of goods and services to the GCC

According to the data, the widening deficit reflects surging imports from the UAE, Pakistan’s largest oil supplier in the bloc.

July imports from the Emirates reached $816 million, while the FY25 bill stood at $8 billion. The UAE is also Pakistan’s biggest export market in the GCC, buying $2.12 billion worth of goods last year, SBP data showed.

Saudi Arabia and Qatar were other key suppliers, exporting $3.8 billion and $3.5 billion worth of oil and gas to Pakistan respectively in FY25.

Pakistan’s cash-strapped government is struggling to rein in its external account by curbing imports and boosting exports, but the country’s overall trade deficit rose nine percent to $26 billion last year, according to the Pakistan Bureau of Statistics.

The country has been negotiating a free trade agreement (FTA) with the GCC to improve market access and signed preliminary accords in Riyadh in 2023.

“Pakistan has huge potential in IT services exports to the MENA [Middle East and North Africa] region,” said Sana Tawfik, head of research at Arif Habib Limited.

“The FTA will increase Pakistan’s competitiveness against its regional peers and help diversify its export base to traditional regions where it has been facing GSP+ and tariff issues,” she added, referring to the European and US markets.