Pakistan's trade deficit widened by 22 per cent to $39.5 billion in the financial year ended June 2026, as imports climbed and exports contracted, according to data compiled by the Pakistan Bureau of Statistics (PBS). The figures underscore a deepening structural imbalance in the country's external account at a time when the broader economy remains under significant stress.

Key Trade Figures

Pakistan's total imports rose 8 per cent to $69.6 billion during fiscal year 2025-26, while exports fell 6 per cent to $30.1 billion. The monthly picture was even starker: in June alone, the trade deficit ballooned 57 per cent to $4.53 billion, with exports dropping 10 per cent to $2.24 billion and imports surging 26 per cent to $6.77 billion.

Why the Deficit Is Structural

Muhammad Waqas Ghani, head of research at JS Global Capital Limited, described the imbalance as structural in nature. '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,' he said.

Textiles remain Pakistan's dominant export category, earning $17.97 billion in the last fiscal year — a marginal increase of just 0.34 per cent from $17.91 billion the previous year, according to data from the All Pakistan Textile Mills Association (APTMA). The near-stagnation of textile revenues, despite their outsized share of export earnings, highlights the limited diversification of Pakistan's export base.

Central Bank and Industry Sound the Alarm

State Bank of Pakistan (SBP) Governor Jameel Ahmad flagged the widening trade deficit as a matter of serious concern during a media briefing in Karachi. His remarks came as business bodies also raised alarms over the trajectory of the trade gap.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) termed the development a 'massive deterioration in Pakistan's trade balance.' FPCCI president Atif Ikram Sheikh warned: 'The effect of plunging exports poses a critical threat to the country's external account stability and foreign exchange reserves. It is a clear indicator that our export-oriented industries are being pushed to the wall.'

Demand Recovery Accelerating the Gap

Ghani noted that a partial recovery in domestic demand is compounding the problem. 'As domestic demand and growth are recovering, imports are rising much faster than exports, causing the trade gap to widen,' he said. This dynamic — where a demand-led recovery pulls in more imports without a corresponding export response — is a recurring pattern in Pakistan's economic cycles and risks straining its foreign exchange reserves further.

What Comes Next

With the SBP, industry federations, and independent analysts all flagging the same concern, pressure is mounting on Islamabad to accelerate export diversification and reduce dependence on energy imports. Analysts warn that without structural reforms — particularly in the energy sector and export product mix — the trade deficit could widen further if domestic demand continues to recover faster than export capacity.