Pakistan Trade Deficit Widens 16% to $14.6bn
The Pakistan trade deficit widened by 16 per cent to $14.6 billion in the first four months of the current fiscal year, as imports surged past $26 billion while exports grew far more slowly, data from the Pakistan Bureau of Statistics (PBS) showed on Friday.
The gap between what Pakistan buys from abroad and what it sells widened by more than $2 billion compared with the same period last year, when the deficit stood at $12.61 billion. Imports reached $25.96 billion in July-October, up 12.59 per cent, while exports rose 8.52 per cent to $11.33 billion.
October deficit jumps nearly 20 per cent
The monthly trade deficit widened by 19.7 per cent from a year earlier to $3.88 billion, and by 10.3 per cent from September’s $3.52 billion.
Imports in October climbed to $6.8 billion, up 5.7 per cent from September and 11.8 per cent from October last year. Exports, by contrast, were flat month on month at $2.9 billion, rising just 2.8 per cent, or $81 million, from a year earlier. The rupee closed almost unchanged on Friday, gaining one paisa to Rs276.66 against the dollar, according to the State Bank of Pakistan (SBP).
Why the Pakistan trade deficit keeps growing
Pakistan’s import bill is dominated by petroleum products, machinery, chemicals and essential goods, so any rise in global energy prices or domestic demand quickly feeds into the gap. The central bank has projected imports of $71 billion for the full fiscal year, driven largely by higher energy costs. Exports, meanwhile, remain stuck in a narrow band of $2.5 billion to $3 billion a month.
The government’s own trade liberalisation policy has also fallen short of its promise. The commerce ministry, the World Bank and the International Monetary Fund (IMF) had projected that opening up trade would raise exports by 14 per cent and imports by only 7 per cent. Instead, exports rose 8.5 per cent and imports 12.6 per cent. In the last fiscal year, exports actually fell 6 per cent to less than $31 billion.
Debt rollovers keep the reserves afloat
The widening deficit matters because it keeps Pakistan dependent on foreign creditors. The figures were released two days after Finance Minister Muhammad Aurangzeb disclosed that Pakistan had secured another rollover of $3 billion in debt from Saudi Arabia last month. Finance Secretary Imdadullah Bosal told a parliamentary committee that external debt repayments were estimated at $21.5 billion, of which the government would seek $10.5 billion in rollovers.
Pakistan’s total external debt has nearly doubled in a decade to $135.1 billion, according to the World Bank’s International Debt Report 2026, with China the largest single creditor at $22.4 billion. The State Bank’s reserves, recently at $21.56 billion, are themselves largely the product of foreign borrowing.
Prime Minister Shehbaz Sharif has promised that the 25th IMF programme, which ends next September, will be the last in the country’s history. That promise will face its real test before the next general elections.
Small exporters still wait for relief
One reason exports have not responded is the government’s preference for large industries. In much of the world, small and medium-sized enterprises (SMEs) drive export growth. In Pakistan, they remain on the margins of trade policy, and the prime minister’s SME financing push has yet to deliver cheaper credit for smaller firms.
Petrol prices fell for a fifth straight time this week, which eases the energy import bill slightly. Short-term inflation has also surged past 12 per cent, driven by costly food and LPG.
What happens next
Planning Minister Ahsan Iqbal has said taking exports to $60 billion by 2029 is a prerequisite for avoiding another IMF programme. The government has set a goods export target of $34 billion for this fiscal year, against $30.8 billion last year. If imports keep rising at more than 12 per cent while exports grow at half that rate, the next IMF programme will be harder to avoid, not easier.
What is Pakistan’s trade deficit?
The gap between the value of goods Pakistan imports and exports. In July-October, imports of $25.96 billion exceeded exports of $11.33 billion, leaving a $14.63 billion deficit.
Why did the trade deficit widen?
Imports grew 12.59 per cent while exports grew only 8.52 per cent. Higher energy costs and strong demand for imported goods pushed the import bill up faster than export earnings, and subsidies worth Rs88 billion have not lifted export growth beyond single digits.
When does the IMF programme end?
The 25th IMF programme ends in September 2027. The prime minister has promised it will be the last, but that depends on lifting exports towards the $60 billion target set for 2029.
What is Pakistan’s export target for this fiscal year?
The government has set a goods export target of $34 billion for this fiscal year, against $30.8 billion last year.
