How Did Pakistan's Trade Deficit Surge by 44%?
Synopsis
Pakistan's trade deficit with its nine neighboring countries has surged by a staggering 44.42%, reaching $7.683 billion in the first half of FY 2025-2026. This significant decline in exports, particularly to Afghanistan and China, raises concerns over the country's trade dynamics and economic stability.
Key Takeaways
Pakistan's trade deficit increased by 44.42%.
Exports fell to $1.965 billion, down 18.56%.
Imports surged to $9.648 billion, rising 24.76%.
Trade with Afghanistan has been suspended.
Ongoing economic challenges continue to affect trade balance.
New Delhi, Feb 9 (NationPress) Pakistan's trade deficit with nine neighboring countries has experienced a dramatic increase of 44.42%, reaching $7.683 billion during the first half of the fiscal year 2025-2026 (July-December). This figure marks a significant rise from $5.32 billion in the same timeframe last year, as reported by the latest data from the State Bank of Pakistan.
The primary reason for this growing deficit is a noticeable drop in exports, particularly to China, Afghanistan, and Bangladesh. Since October 10, 2025, Pakistan has halted all trade with Afghanistan, including exports, which has further disrupted regional trade dynamics, according to an article in the UAE’s Gulf News.
Although exports to India saw a slight uptick in percentage terms, their overall value remained minimal. In contrast, shipments to Bangladesh and Sri Lanka reflected negative growth during the review period, as reported by the Pakistani daily Dawn News.
In the initial half of FY26, total exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives declined by 18.56% to $1.965 billion, down from $2.413 billion in the same period last year. Conversely, imports from these nations surged by 24.76% to $9.648 billion, compared to $7.733 billion last year, the article stated.
China continues to be the leading source of Pakistan’s imports, which increased by 25.61% to $9.472 billion, while exports to China fell by 5.59% to $1.216 billion. Imports from India decreased by 12.73% to $97.734 million, with exports to India rising slightly to $2.926 million from $0.399 million during the same period last year.
Exports to Afghanistan experienced a sharp decline of 56.61% to $219.489 million, while imports dropped by 36.75% to $6.321 million. Exports to Bangladesh decreased by 7.54% to $358.499 million, and Sri Lanka saw a 27.13% decline in exports to $163.173 million, even as imports from both countries increased.
The expanding trade gap mirrors a similar trend from FY25, where the deficit with these neighbors grew by 29.42% to $12.297 billion from $9.502 billion the previous year, emphasizing the ongoing challenges faced by Pakistan in maintaining a stable regional trade balance.
Point of View
I believe this widening trade deficit underscores the urgent need for Pakistan to reassess its trade strategies. The significant drop in exports, particularly to key partners like China and Afghanistan, poses serious challenges that must be addressed to stabilize the nation's economy.
NationPress
5 Aug 2026
Frequently Asked Questions
What caused the surge in Pakistan's trade deficit?
The surge in Pakistan's trade deficit was largely caused by a significant decline in exports, particularly to countries like China, Afghanistan, and Bangladesh, compounded by a halt in trade with Afghanistan.
What is the current trade deficit figure for Pakistan?
As of the first half of FY 2025-2026, Pakistan's trade deficit has reached $7.683 billion.
How have imports changed in relation to exports?
Imports from neighboring countries increased by 24.76% to $9.648 billion, while exports fell by 18.56% to $1.965 billion.
What impact does the trade deficit have on Pakistan's economy?
A widening trade deficit can lead to economic instability, currency depreciation, and increased reliance on foreign loans.
Which countries are Pakistan's major trading partners?
Pakistan's major trading partners include China, Afghanistan, India, Bangladesh, Sri Lanka, Iran, Nepal, Bhutan, and the Maldives.
