'Four-year high': Pakistan trade deficit hits $39.5bn in FY26

Pakistan trade deficit widened to $39.47 billion in the fiscal year ended June 30, 2026 (FY26), up by 21.57% compared to preceding fiscal year 2024-25, Pakistan Bureau of Statistics (PBS) reported on Thursday.

The country’s trade deficit hit “four-year high” in FY26, said Topline Securities.

• A trade deficit is a condition where the value of a country’s imports is greater than its exports, impacting its economic balance.

In June 2026, the trade deficit was recorded at $4.53 billion. This was over 57% higher compared to the same month of June in 2025. The June 2026 trade deficit was almost 64% higher compared to $2.76 billion recorded in the prior month of May 2026, PBS said.

The spike in the trade deficit was a result of surge in imports and cut in export earnings in all three cases; FY26 compared to FY25, June 2026 compared to June 2025, and June 2026 compared to May 2026.

According to the PBS, import volume rose nearly 8% to $69.59 billion in FY26 compared to FY25. On the other hand, export earnings dropped almost 6% to $30.13 billion in the year compared to the prior year.

Similarly, the import of goods rose 26.27% to $6.77 billion in June 2026 compared to June 2025. The export earnings decreased 9.61% to $2.24 billion in June 2026 compared to the same month of the last year.

The import volume surged slightly over 24% to $6.77 billion in June 2026 compared to May 2026. The export earnings decreased almost 17% to $2.24 billion in the month compared to the prior month, as per PBS data.

AKD Securities Director Research Muhammad Awais Ashraf said the spike in oil prices recorded during late February to late June 2026, due to US-Iran conflict, played a key role in taking import volume on a higher side in FY26. The Middle Eastern geopolitical crisis had also jacked up freight charges and cost of insurance on imports during the period that stretched the imports, he added.

“Besides, the import bill also widened in different months of FY26 in the wake of reopening of Pakistan’s economy following stabilisation achieved in prior years. The import of cars and machinery rose sharply in the wake of decline in the central bank key policy rate to 11.5% at present compared to record high at 22% two years ago in June 2024.

“Pakistan’s cotton imports also rose due to low production of the commodity over the past two years,” Ashraf said.

He further said the country’s export earnings had dropped due to global economic slowdown amid geopolitical crises in the Middle East and Europe.

“Pakistan’s food exports, including rice and vegetables, recorded a sharp drop in FY26 due to the return of cheaper Indian rice into the export market in the year. Moreover, Pakistan exports suffered to Afghanistan and Iran due to border closures with both the neighbouring countries,” Ashraf said.