Pakistan’s merchandise trade deficit hit $10.79 billion during the first quarter of the 2026-27 fiscal year, a 15.13 percent jump from the $9.37 billion shortfall seen in the same period last year. While quarterly exports climbed to $8.43 billion, the rise was eclipsed by a surge in imports to $19.22 billion.
Trade Deficit Widens as Imports Outpace Exports
The Pakistan Bureau of Statistics reports that the trade gap expanded between July and September 2026. Imports rose 13.2 percent to $19.22 billion, while exports grew 10.8 percent to $8.42 billion.
This imbalance persisted through September, when imports climbed 11.1 percent to $6.49 billion, up from $5.85 billion in the same month last year. The deficit rose to $10.79 billion for the quarter.
September Export Growth
Export earnings reached $2.94 billion in September 2026, a 17.6 percent increase from the $2.50 billion recorded in September 2025. This monthly figure also represented a 16.1 percent gain over the $2.53 billion in exports seen in August.
Despite this monthly momentum, the trade balance remains strained. The monthly deficit reached $3.56 billion in September, a 6.2 percent increase over the $3.35 billion recorded in September last year.
Jawed Bilwani, Coordinator of the All Pakistan Exporters Association Forum, stated that exporters are caught between high operational costs and a lack of competitive parity. He noted that Pakistani exporters operate on narrow profit margins compared to regional competitors, face higher taxes than other businesses, and endure prolonged delays in refund payments without compensation.
Bilwani added that arbitrary Federal Board of Revenue (FBR) deductions, liquidity pressures, and high operational costs are crippling the sector. Shipping costs have also risen since February due to the conflict in the Middle East, which disrupted supply chains in the Strait of Hormuz. Exports to Afghanistan have remained suspended since October 2025.
United States Leads Pakistani Export Destinations
The United States was the primary destination for Pakistani goods during the first two months of the 2026-27 financial year, receiving $1.118 billion in shipments, a 0.53 percent increase. The United Kingdom followed with $413.801 million, and China ranked third with $397.758 million.
Other major markets included the United Arab Emirates at $364.994 million and Spain at $298.564 million. Conversely, exports to Germany fell to $255.301 million from $305.499 million last year, and exports to Italy dropped to $201.750 million. Exports to Saudi Arabia reached $104.913 million, while exports to Turkiye rose to $39.520 million from $28.542 million. Energy costs continued to influence the import bill.
Government Sets Export Target of 32.5 Billion Dollars
The government set an export target of $32.5 billion for the current fiscal year, while anticipating imports will grow to $70 billion. The Planning Ministry previously projected that export proceeds would climb to $60 billion by 2030, a figure later revised to $100 billion by 2035.
The national balance of payments relies on foreign remittances and new loan tranches to cover maturing debt, especially as the import bill for FY26 grew to $69.6 billion.