by Pakistan’s trade deficit has widened once again, rising by 9% in the fiscal year 2024-25 (FY25) to reach a staggering $26 billion, according to the latest figures released by the Pakistan Bureau of Statistics (PBS). This growing gap between exports and imports is fueling concerns over the country’s fragile economic recovery and external financing needs.
What the Numbers Say
- Trade Deficit (FY25): $26 billion
- Increase over FY24: 9%
- Total Exports: $31.2 billion
- Total Imports: $57.2 billion
Despite some recovery in exports, the surge in imports — driven by energy, food, machinery, and industrial raw materials — has once again tipped the scales.
Key Factors Behind the Trade Gap
1. Rising Global Prices
Higher prices of petroleum products, LNG, and other essential imports have significantly contributed to the import bill, especially with international commodity prices on the rise.
2. Currency Depreciation
The continuous weakening of the Pakistani rupee against the US dollar has made imports more expensive, further swelling the trade deficit.
3. Slow Export Growth
While exports saw a modest uptick in FY25 — particularly in textiles, IT services, and rice — the growth remains insufficient to match the rapidly rising import bill.
4. Demand for Capital Goods
As the government pushes industrial revival and energy projects, imports of machinery and raw materials have also increased, adding to the trade imbalance.
Sector-wise Breakdown
- Top Export Sectors:
- Textiles and garments
- Rice and agro products
- IT and software services
- Top Import Categories:
- Petroleum products
- Food and agricultural commodities
- Industrial machinery
- Vehicles and auto parts
- Pakistan’s Trade Deficit Increases by 9% to Hit $26 Billion in FY25
Impact on the Economy
A rising trade deficit puts pressure on Pakistan’s foreign exchange reserves, increases the demand for external debt and aid, and threatens the stability of the exchange rate. This can lead to a higher current account deficit, making the country more vulnerable to external shocks.
Government’s Response
The Ministry of Commerce and Finance has acknowledged the challenge and stated it is working on:
- Expanding export incentives for non-traditional sectors
- Promoting import substitution through local manufacturing
- Strengthening regional trade ties
- Enhancing IT and freelance services exports
- Negotiating better trade terms with partners like China, the UAE, and Central Asian states
Outlook for FY26
Analysts warn that unless bold reforms are implemented, the trade deficit may continue to climb. The upcoming fiscal year will be crucial, with the government under pressure to improve the balance of payments, attract foreign investment, and diversify exports.
Conclusion
Pakistan’s growing trade deficit highlights the structural imbalances in its economy. While short-term measures can offer relief, sustainable growth will depend on long-term strategies like industrial modernization, tech-driven exports, and energy independence. The $26 billion deficit is a wake-up call for urgent economic reforms — not just to stabilize the current account, but to secure Pakistan’s financial future.
