Pakistan Trade Deficit Widens to $14.63 Billion as Imports Surge and Exports Crawl

Pakistan’s trade deficit widened by nearly 16 per cent in the first four months of the current financial year, official figures showed on Friday, as imports surged to almost $26 billion while exports grew only slowly. The gap between what the country buys from the world and what it sells to the world reached $14.63 billion between July and October 2026 — about $2 billion more than in the same period last year.

The numbers, released by the Pakistan Bureau of Statistics (PBS), underline a problem Pakistan has struggled with for years: the country spends far more on imports than it earns from exports, and the difference has to be paid for with loans, foreign aid and rollovers of old debt.

The numbers in brief

Here is what the PBS data shows for July to October 2026, the first four months of financial year 2026–27:

• Exports: $11.34 billion, up 8.52 per cent from $10.45 billion in the same period last year.
• Imports: $25.96 billion, up 12.59 per cent from $23.06 billion a year earlier.
• Trade deficit: $14.63 billion, up 15.97 per cent from $12.62 billion last year.

October alone told the same story in sharper form. Exports in the month grew by just 2.84 per cent to $2.93 billion, while imports jumped 11.81 per cent to $6.81 billion. The monthly trade deficit widened by 19.70 per cent to $3.87 billion, against $3.24 billion in October last year.

The figures also show that the problem is not new. In the last financial year, FY26, exports fell 5.97 per cent to $30.13 billion, missing the annual target by $4.87 billion, while imports grew 7.89 per cent to $69.59 billion. The full-year trade deficit widened by 21.57 per cent to $39.47 billion. A year earlier, in FY25, the deficit had stood at $26.27 billion.

What is a trade deficit, and why does it matter?

A trade deficit happens when a country imports more goods than it exports. Pakistan sells textiles, rice, leather goods and other products abroad, and it buys oil, gas, machinery, food, medicines and many other things from abroad. When the import bill is bigger than the export earnings, the difference is the trade deficit.

The deficit matters because it has to be paid for. Pakistan does not earn enough dollars from exports to cover its import bill, so it needs other sources of dollars: loans from friendly countries and international lenders, money sent home by Pakistanis working abroad, and foreign investment. When those sources fall short, the country’s foreign exchange reserves shrink, the rupee comes under pressure, and the government has to go back to lenders — including the IMF — for help.

That is why the trade deficit sits at the heart of Pakistan’s economic story. A smaller deficit means less borrowing and more room for the government to spend on schools, hospitals and roads. A widening deficit means the opposite: more debt, more dependence on creditors, and less freedom to make economic decisions.

Why imports are rising faster than exports

Imports averaged about $6.5 billion a month in the first four months of the year, while exports averaged only about $2.8 billion a month. In other words, Pakistan is buying more than twice as much from the world as it sells to it.

The central bank has projected that imports will rise to $71 billion this financial year, driven mainly by higher energy import bills. Pakistan imports most of its oil and gas, so when global energy prices rise — or when the country needs more fuel — the import bill climbs quickly.

Other factors are adding to the pressure. The conflict in the Middle East has disrupted shipping through the Strait of Hormuz, pushing up shipping costs for traders. Higher freight charges make everything Pakistan buys from abroad more expensive, and they also make Pakistani exports less competitive, because it costs more to ship them to buyers.

Why exports are stuck

Exports have been stuck at roughly $2.5 billion to $3 billion a month for years. Even a fall of Rs100 in the value of the rupee against the dollar — which should, in theory, make Pakistani goods cheaper for foreign buyers — could not give exports a major boost, according to The Express Tribune.

Several problems are holding exporters back:

Lost markets. Export growth has slowed mainly in the Middle Eastern and European markets since the war in the Middle East began. An export market in Afghanistan worth more than $1.5 billion has also remained closed since October 2025, after exports to Afghanistan were suspended. This week, the National Assembly Standing Committee on Finance raised concerns about the impact of closing three international borders for security reasons on exports. Minister of State for Finance Bilal Kayani agreed there would be an impact, but said the government had to shut the border with Afghanistan on security grounds. According to MNA Mirza Ikhtiar Baig, the only open land route for trade is now through China.

High costs. Exporters have been complaining about the high cost of doing business, above all the high price of energy. Factories that pay more for electricity and gas find it harder to compete with rivals in countries where energy is cheaper.

Too little help for small businesses. One reason for the absence of an export surplus is the government’s preference for large industries, unlike much of the world where small and medium-sized enterprises (SMEs) play a major part in expanding exports. The government has kept Rs88 billion in subsidies in the budget to provide cheaper loans, mostly to large exporters. Prime Minister Shehbaz Sharif has lately begun focusing on SME financing, but those meetings have not yet translated into meaningful benefits for smaller businesses.

How Pakistan pays the bill

A trade deficit of $14.63 billion in four months has to be financed, and the latest figures show Pakistan is still leaning heavily on borrowed money.

The figures were released two days after Finance Minister Muhammad Aurangzeb disclosed that Pakistan had secured yet another rollover of $3 billion in debt from Saudi Arabia last month. A rollover means the lender agrees to extend the repayment deadline instead of demanding the money back — it gives breathing space, but the debt does not go away.

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 of bilateral and commercial debt. Beyond these rollovers, the government remains in constant search of new foreign loans to build reserves, which are already the product of foreign borrowing and the central bank’s domestic purchases of foreign currency.

The rupee, meanwhile, was almost flat. It appreciated by one paisa to Rs276.66 to the dollar on Friday, according to the central bank.

What the government plans to do

The government has set an ambitious target: goods exports of $34 billion this financial year, against $30.8 billion last year. But at the current pace, it would miss its longer-term target of $60 billion in exports by 2029. Planning Minister Ahsan Iqbal has said that taking exports to $60 billion is a prerequisite for avoiding any future IMF programme.

The Planning Ministry had earlier projected that export earnings would climb to $60 billion by 2030, a target that has largely remained confined to official documents. More recently, the ministry revised the projection upwards, setting a fresh target of $100 billion to be achieved by 2035.

Finance ministry officials are working on various measures to promote exports, particularly those of small and medium enterprises. The government’s trade liberalisation policy — opening up trade by cutting tariffs and removing barriers — was supposed to help: the Commerce Ministry and the World Bank had predicted a 14 per cent increase in exports and only a 7 per cent rise in imports. So far, it has not worked out that way. Exports grew 8.5 per cent in the first four months, while imports rose 12.6 per cent.

Prime Minister Shehbaz Sharif has promised that the 25th IMF programme, which ends in September next year, will be the last in the nation’s history. That vow will face its real test before the next general elections — and the trade figures will be one of the main measures by which it is judged.

What happens next?

Three things will decide whether the trade gap narrows or keeps widening in the months ahead.

First, energy prices. If global oil and gas prices stay high, Pakistan’s import bill will keep climbing, because the country cannot quickly cut its dependence on imported fuel.

Second, exports. The government needs to show that its measures for small and medium exporters — cheaper loans, lower energy costs, easier access to markets — actually translate into higher sales abroad. The closure of the Afghan market and the disruption of Middle Eastern trade routes will not be easy to replace.

Third, financing. Pakistan must repay an estimated $21.5 billion in external debt, and it is seeking $10.5 billion in rollovers. If friendly countries and commercial lenders agree, the pressure eases. If they do not, the government will have to find dollars from elsewhere — or cut imports, which would slow the economy.

For ordinary Pakistanis, the trade deficit may sound like a distant, technical number. But it shapes everyday life: it affects the value of the rupee, the price of imported fuel and food, and how much the government can spend on public services. A country that earns more from the world has more choices. A country that keeps borrowing to pay for imports has fewer.

Frequently Asked Questions

What is Pakistan’s trade deficit right now?

Pakistan’s trade deficit was $14.63 billion in the first four months of financial year 2026–27 (July to October 2026), according to the Pakistan Bureau of Statistics. That is 15.97 per cent wider than the $12.62 billion recorded in the same period last year.

How much did Pakistan export and import?

Exports were $11.34 billion in July–October 2026, up 8.52 per cent year on year. Imports were $25.96 billion, up 12.59 per cent. In October alone, exports were $2.93 billion and imports were $6.81 billion.

Why is Pakistan’s trade deficit widening?

Imports are growing much faster than exports. The import bill is being pushed up by higher energy costs and rising shipping charges linked to the Middle East conflict, while exports are held back by lost markets — including Afghanistan, worth over $1.5 billion — high energy costs for factories, and too little support for small and medium-sized exporters.

How does Pakistan pay for the trade deficit?

The gap is financed through foreign loans, rollovers of existing debt and money sent home by overseas Pakistanis. Saudi Arabia recently rolled over $3 billion in debt, and the government is seeking $10.5 billion in rollovers out of an estimated $21.5 billion in external debt repayments.

What is the government’s export target?

The government has projected goods exports of $34 billion this financial year, up from $30.8 billion last year. Its longer-term goal is $60 billion in exports by 2029, and the Planning Ministry has set a target of $100 billion by 2035.

Conclusion

Pakistan’s trade deficit widened to $14.63 billion in the first four months of the financial year because imports are growing far faster than exports. The country bought $25.96 billion worth of goods from the world and sold only $11.34 billion — a gap of more than $2 billion a month that has to be covered by borrowing and debt rollovers.

The figures are a reminder that Pakistan’s economic recovery depends on a basic change: selling more to the world. Until exports grow faster than imports, the country will keep depending on friendly lenders and the IMF — and the promise that the current IMF programme will be the last will remain very hard to keep.

Sources

• Dawn, “Exports post sluggish growth in July-October”, 7 November 2026: https://www.dawn.com/news/2042685
• The Express Tribune, “Trade gap widens 16% to $14.6b”, 7 November 2026: https://tribune.com.pk/story/2639038/trade-gap-widens-16-to-146b

This article is for general information and education only. It is not legal or financial advice.