KARACHI: Pakistan’s trade deficit widened 22% to $39.5 billion in the fiscal year ended June, according to official data released this week, with analysts saying on Saturday the economy continues to rely heavily on imports while struggling to broaden and boost its export base.
According to data from the Pakistan Bureau of Statistics (PBS), the country’s imports increased 8% to $69.6 billion, while exports declined 6% to $30.1 billion in the fiscal year 2025-26.
On a month-on-month basis, Pakistan’s trade deficit widened 57% to $4.53 billion in June, as exports fell 10% to $2.24 billion while imports surged 26% to $6.77 billion, according to PBS data.
“Pakistan’s trade deficit is structural because the economy relies heavily on imported energy, machinery and industrial raw materials, while exports remain concentrated in low value-added products such as textiles,” Muhammad Waqas Ghani, head of research at JS Global Capital Limited, told Arab News on Saturday.
Textiles remain Pakistan’s largest export sector, earning $17.97 billion last year, up just 0.34% from $17.91 billion a year earlier, according to data shared by the All Pakistan Textile Mills Association (APTMA).
“As domestic demand and growth are recovering, imports are rising much faster than exports, causing the trade gap to widen,” said Ghani.
Islamabad achieved 3.7% economic growth last year and is targeting 4% growth in the current fiscal year.
‘BIG CONCERN’
Pakistan’s Ministry of Commerce spokesperson, Naveed-ul-Haq Kallu, did not respond to questions seeking comment on the widening trade deficit or the measures the government was taking to address it.
However, State Bank of Pakistan (SBP) Governor Jameel Ahmad raised the issue during a media briefing in Karachi this week.
“The increase in trade deficit is a big concern, and its solution lies only in increasing exports,” he said.
“To increase exports, the government has announced many incentives in the new budget while we [at the SBP] too are bringing further improvements to the export refinance scheme,” he added.
Business leaders also expressed concern over the widening trade gap.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) called the deficit a “massive deterioration in Pakistan’s trade balance.”
“The effect of plunging exports poses a critical threat to the country’s external account stability and foreign exchange reserves,” Atif Ikram Sheikh, FPCCI president, said in a statement a day earlier.
“It is a clear indicator that our export-oriented industries are being pushed to the wall,” he added.
Sheikh urged the government to rationalize energy costs, reinstate the Final Tax Regime (FTR) for exporters, and lower the policy rate to prevent widespread industrial closures and a further decline in exports.
