Islamabad, 2 october 2025 — Pakistan’s trade imbalance deepened significantly in the first quarter of the 2025-26 fiscal year (July–September), with the deficit expanding by $2.32 billion compared to the same quarter last year. According to data released by the Pakistan Bureau of Statistics (PBS), the trade gap surged to $9.36 billion, up from $7.04 billion in Q1 of FY 2024–25, marking a growth of about 33 percent.

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Exports Down, Imports Surge

The numbers reveal a troubling divergence:

• Exports decreased by 3.83 percent, falling to $7.60 billion.
• Imports climbed sharply by 14.39 percent, totaling $16.97 billion.

In September 2025 alone, exports reached $2.50 billion, a modest 3.64 percent increase from August’s $2.41 billion. But on a year-on-year basis, exports dropped 11.71 percent, compared to September 2024’s $2.83 billion. Meanwhile, imports in September crossed $5.84 billion, pushing the monthly trade deficit to $3.34 billion — up 16.33 percent compared to the prior month, and 46 percent higher than September 2024.

These figures signal that Pakistan’s export sector is under stress, while import pressures remain unabated.

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What’s Fueling the Widening Gap

A few forces are likely at play:

• Global headwinds: Declining demand, high freight costs, and supply chain disruptions may have depressed export growth.
• Energy & raw material imports: Pakistan heavily depends on imported energy and raw inputs; price hikes in global commodities push up import bills.
• Currency & inflation effects: A weaker rupee makes imports costlier and may erode export competitiveness if domestic cost inflation is high.
• Structural export weaknesses: Limited diversification, low value addition, and weak performance in textile and agricultural sub-sectors may constrain export recovery.
• Policy constraints: Tariff distortions, trade barriers abroad, delays in refunds, and logistic inefficiencies may be amplifying challenges.

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Risks & Implications

• Foreign exchange pressure: A growing trade deficit exerts pressure on forex reserves and exchange rate stability.
• Current account stress: Unless offset by inflows (remittances, services, investments), the current account could deteriorate further.
• Inflationary spillovers: Higher import costs can fuel domestic inflation, especially for energy, food, and raw materials.
• Debt & financing burden: Pakistan may need to borrow more to bridge the gap, worsening debt servicing obligations.
• Competitiveness challenge: Persistently weak export growth may erode Pakistan’s share in global markets, especially against regional competitors.