Pakistan’s trade deficit hits $24 Billion amid import surge

ISLAMABAD: The Pakistan Bureau of Statistics (PBS) reported on Wednesday that the country’s trade deficit widened to $24 billion during the first 11 months of the current fiscal year, reflecting a 10.6% increase compared to the same period last year.

A sharp increase in imports primarily drove this expansion, outpacing the modest growth in exports.

From July to May in the fiscal year 2024–25, Pakistan’s merchandise exports rose by 4.72%, reaching $29.44 billion. In contrast, imports jumped by 7.3%, totaling $53.45 billion.

The widening gap between imports and exports continues to pressure Pakistan’s external accounts, straining the rupee and depleting dollar reserves.

Despite these trade imbalances, broader macroeconomic indicators in Pakistan have begun to show signs of stabilization.

Headline inflation rebounded slightly to 3.46% in May after dropping to a historic low of 0.30% in April 2025. More importantly, Pakistan’s current account posted a surplus of $1.88 billion during July–April FY25, marking a sharp turnaround from the $1.34 billion deficit recorded in the same period last year.

A sharp 30.9% surge in workers’ remittances, totaling $31.2 billion, largely drove the improvement in the current account.

Although merchandise exports declined 10.1% year-on-year in May to $2.55 billion, they rebounded strongly every month, increasing 17.4% from April. Imports in May rose 5.2% year-on-year to $5.17 billion but fell 7.6% from the previous month, providing some short-term relief on the external front.

Despite the widening trade gap, some positive indicators have offered relief. Pakistan’s monthly average export volume stands at $2.67 billion, putting the country on track to potentially exceed $32 billion in exports by the end of fiscal year 2024-25 in June.

s note that high domestic interest rates have hurt export competitiveness. Banks have tightened credit conditions and prioritized investment in government securities over lending to the private sector, limiting businesses’ access to financing.

Meanwhile, Pakistan recorded a smaller but notable trade deficit of $2.5 billion in services during July–April FY25, slightly exceeding last year’s $2.4 billion gap.

Service imports increased by 7.9% to reach $9.43 billion. At the same time, exports rose by 9.3% to $6.93 billion, driven by growth in transport, IT, and business services.

The Information and Communication Technology (ICT) sector continued to perform strongly, with exports rising by 21.1% to $3.14 billion, nearly half of the country’s total services exports.

Analysts say government initiatives, including freelancer incentives, skills development programs, and international certification support, have started yielding positive results for the digital economy.