Key facts
- Pakistan's merchandise trade deficit narrowed 13.7% y/y to USD 2.58bn in May.
- Exports rose 1.3% y/y to USD 2.71bn in May.
Pakistan's merchandise trade deficit narrowed by 13.7% year-on-year to USD 2.58 billion in May, reaching an 11-month low. Exports rose 1.3% to USD 2.71 billion, while imports fell 6.6% to USD 5.29 billion. For July-May FY26, the cumulative deficit widened 17.5% to USD 34.8 billion.
Pakistan's merchandise trade deficit narrowed by 13.7% year-on-year to USD 2.58 billion in May, reaching an 11-month low. Exports increased by 1.3% year-on-year to USD 2.71 billion, marking a four-month high. Imports, however, decreased by 6.6% year-on-year to USD 5.29 billion. The decline in imports is attributed to potential front-loading of oil purchases in April, reducing the need for shipments in May, and possibly lower fuel consumption due to elevated prices. On a cumulative basis for the first 11 months of fiscal year 2026 (July-May), the goods trade deficit widened by 17.5% year-on-year to USD 34.8 billion. Exports fell by 5.6% year-on-year to USD 27.9 billion, impacted by lower food exports and the suspension of trade with Afghanistan. Imports rose by 5.9% year-on-year to USD 62.7 billion, driven by stronger domestic demand. Despite the wider cumulative deficit, Pakistan's external sector remains resilient with rising foreign exchange reserves and a stable rupee.
The narrowing trade deficit in May offers a positive short-term signal for Pakistan's external balance, though the widening cumulative deficit for FY26 highlights ongoing challenges in managing imports and boosting exports, impacting the country's overall economic stability and financing needs.