Pakistan’s current account deficit widens to $874m in Q1
Pakistan’s current account deficit widened by 16 per cent year-on-year to $874 million in the first quarter of the fiscal year 2026-27, State Bank data compiled by Topline Securities showed on Friday. The July-September period took the Pakistan current account deficit to $874 million, compared with $755 million in the same months last year.
What the September numbers show
September alone accounted for much of the pressure. The country posted a current account deficit of $356 million during the month, against a surplus of $133 million in September 2025. According to Topline Securities, the monthly deterioration came mainly from a $148 million rise in the goods trade deficit, which reached $3.2 billion as imports climbed faster than exports.
Imports in September rose 13 per cent month-on-month to $6.2 billion. Exports also grew, by 23 per cent on the month to $3 billion, but the increase was not enough to close the gap. For the full quarter, imports totalled $17.8 billion, up 14 per cent from $15.5 billion a year earlier, while exports rose 8 per cent to $8.4 billion from $7.8 billion.
Why imports keep outpacing exports
The widening gap reflects a familiar pattern in Pakistan’s external accounts. Demand for imported fuel, machinery and consumer goods has picked up, while export growth has stayed modest. Rising import demand has also been visible in specific categories, with used car imports surging and worrying local automakers. Fuel remains a major component of the import bill, and petrol prices were last recorded at Rs398.96 per litre, a reminder of how energy costs feed into the trade balance.
Reserves are rising even as the deficit widens
There is an interesting contrast in the numbers. While the external deficit widened in the first quarter, Pakistan’s foreign exchange reserves have been moving in the opposite direction. State Bank reserves recently edged up to $26.8 billion, which means the central bank still holds a growing cushion even as the current account slips into deeper deficit. Reserves built through financial inflows, remittances and other channels can offset a trade-driven deficit, at least in the short term. The question for the coming months is whether the deficit keeps growing while those inflows hold.
What the Pakistan current account deficit means for ordinary Pakistanis
A current account deficit simply means Pakistan spent more on imports than it earned from exports during the period. When that gap widens, it puts pressure on the rupee and on foreign reserves. A weaker rupee makes imported goods, fuel and machinery more expensive, and those costs eventually reach shop prices and utility bills. That is why the exchange rate matters to households, and our USD to PKR forecast for October 2026 tracks how currency pressure could play out in the weeks ahead.
What to watch next
Policymakers will be watching whether export growth can catch up with imports in the second quarter. A narrower goods trade deficit would be the quickest way to slow the current account slide. If imports keep rising at the current pace, the central bank may face renewed pressure on reserves, which have been its main line of defence this year.
Frequently asked questions
What is Pakistan’s current account deficit in Q1 FY2026-27?
The deficit stood at $874 million for July-September 2026, up 16 per cent from $755 million in the same period last year, according to State Bank data compiled by Topline Securities.
How large was the deficit in September 2026 alone?
September recorded a $356 million deficit, against a surplus of $133 million in September 2025.
Why did the deficit widen?
Imports grew faster than exports. In the quarter, imports rose 14 per cent to $17.8 billion while exports rose 8 per cent to $8.4 billion, widening the goods trade deficit.
Where was this data reported?
The figures were reported by ProPakistani, citing State Bank of Pakistan data compiled by Topline Securities.
