Current account balance turns negative once more

ISLAMABAD: Pakistan’s current account returned to deficit in April 2026 as a marked increase in imports outweighed gains in exports, according to data released by the State Bank of Pakistan (SBP), pointing to renewed strain on the external account despite continued support from workers’ remittances and stronger services exports.

The SBP data showed the country recorded a current account deficit of $324 million in April 2026, compared with a deficit of $12 million in the same month last year. The monthly position also worsened from March, when Pakistan had posted a surplus.

For the first ten months of FY26, the cumulative current account balance stood at a deficit of $252 million, against a surplus of $1.66 billion in the corresponding period of the previous fiscal year.

Imports rise faster than exports

Analysts said the deterioration was largely linked to a rebound in imports amid improving domestic demand, relaxed restrictions on inflows and higher international commodity prices. Brokerage house Arif Habib Limited said the wider deficit was driven by an 11.4% year-on-year rise in total imports in April, outpacing export growth of 3.4%.

Total imports reached $6.9 billion in April, up from about $6.2 billion a year earlier, while exports rose to $3.47 billion from $3.36 billion in April 2025. According to SBP figures, goods imports increased 14% year-on-year during the month, reflecting higher purchases of petroleum products, machinery, industrial raw materials and consumer goods.

At the same time, goods exports fell 2% from a year earlier, indicating continued weakness in merchandise trade. The trade deficit widened to $3.4 billion in April, up 21% on an annual basis and 47% compared with March, the central bank data showed.

During July-April, total imports climbed to $63.1 billion from $58.1 billion in the same period last year, while exports slipped 0.7% to $34.1 billion from $34.3 billion.

Services and remittances offer support

Services exports remained a positive area, rising 22% year-on-year in April. Technology-related exports continued to support the external account, especially telecommunications, computer and information services, which amounted to $423 million during the month.

Pakistan also continued to receive significant support from overseas workers. Secondary income reached $3.7 billion in April, up 9% from a year earlier, with workers’ remittances contributing about $3.5 billion. Remittances were 11% higher than in the same month last year, although they fell 7.6% from March, when they had stood at $3.8 billion.

For the first ten months of FY26, remittance inflows rose to $33.9 billion, compared with $31.2 billion in the corresponding period of the previous year.

Other external account indicators

The primary income deficit, which includes profit repatriation and interest payments, widened to $657 million in April from $614 million a year earlier, reflecting higher external debt servicing and corporate outflows. However, over July-April, the primary income deficit narrowed 4% to $7 billion from $7.3 billion.

The financial account recorded a surplus of $206 million in April. Even so, cumulative financial account inflows in the first ten months of FY26 slowed sharply to $12 million, compared with a surplus of $1.49 billion in the same period last year, indicating weaker foreign investment and financing inflows.

The Real Effective Exchange Rate (REER), which measures currency competitiveness, rose to 105.80 in April from 105.17 in March, suggesting the rupee remained relatively overvalued against the currencies of trading partners.

Analysts said the external sector remained stable for now because of strong remittances and IMF-backed financing support, but cautioned that continued import growth without a corresponding rise in exports could increase balance-of-payments risks in the coming months.

Separately, the rupee posted a marginal gain against the US dollar in the interbank market on Monday, closing at 278.60 compared with 278.61 on Friday.

Gold prices also moved higher in Pakistan in line with gains in the international bullion market. In the local market, gold rose by Rs900 per tola to Rs477,162, according to the All-Pakistan Gems and Jewellers Sarafa Association. The price of 10 grams increased by Rs772 to Rs409,089. In the previous session on Saturday, gold had fallen by Rs600 per tola to Rs476,262. In the global market, gold prices increased by $9 per ounce to $4,548 per ounce, including a premium of $20. Silver prices in the domestic market rose by Rs26 to Rs8,099 per tola.