Policymakers are expressing concern over the performance of Pakistan’s external sector following data released by the Pakistan Bureau of Statistics (PBS), which shows a decline in merchandise exports in the first quarter of the current fiscal year (FY26). The figures point to weakening international demand and a potential slowdown in external orders.
Export Contraction and Financial Overview
For the first three months of the current fiscal year (July-September), total export proceeds stood at $7.61 billion, reflecting a decrease of 3.83 percent compared to $7.91 billion during the same period last year.
The decline in exports has continued for the second consecutive month of FY26, with September marking the fifth month of contraction in the last six.
- September Exports: Exports in September dropped by 11.71pc to $2.51 billion, down from $2.84bn in the same month last year.
- Month-on-Month Recovery: On a month-on-month basis, exports showed a slight recovery with a 3.64pc increase compared to August.
- Previous Year Comparison (FY25): In FY25, total exports amounted to $32.106bn, reflecting a modest 4.67pc increase from $30.675bn in FY24. However, the pace of growth slowed significantly in the latter half of the year, with export growth turning negative in several months, including February, April, and May.
Exporters are facing pressures from subdued global markets and the high cost of doing business, particularly in the textile sector, where producers have cited escalating expenses as a major concern.
Pakistan trade deficit in September widens by 46% to USD3.3B compared to the same month last year.
Exports fell 12% to USD2.5B while imports are up 14% to USD5.8B.
In the first quarter of FY26, trade deficit widens by 33% to USD9.4B.— Nukta Business (@NuktaBusiness) October 2, 2025
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Trade Deficit Exacerbated by Rising Imports
Compounding the pressure is the widening of the trade deficit in recent months, which exacerbates concerns about Pakistan’s external sector stability.
- Q1 Import Bill: During the first quarter of FY26, Pakistan’s import bill reached $16.97 billion, reflecting a 13.49pc increase compared to $14.95bn during the same period in FY25.
- September Imports: Imports in September grew by 14pc year-on-year, rising to $5.85 billion from $5.13bn in the same month last year.
The widening import bill, coupled with the decline in exports, led to a sharp increase in the trade deficit:
| Period | Trade Deficit (FY26) | Change |
|---|---|---|
| September | $3.34 billion | Expanded by 45.83pc (from $2.29bn in Sept last year) |
| July-September (Q1) | $9.37 billion | Up from $7.05bn in the same period last year |
Policy Imperatives
The growing trade imbalance poses significant challenges for the country’s economic stability and raises further questions about the sustainability of its external accounts.
Policymakers will need to address both the decline in exports and the rising import costs to stabilise the trade balance and protect the country’s economic position on the global stage.
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