Pakistan’s exports to EU post marginal rise despite GSP+

ISLAMABAD: Pakistan’s exports to Europe recorded only a slight increase during the first 10 months of fiscal year 2025-26, as weaker shipments to major Western and Northern European destinations offset gains in Southern and Eastern Europe, according to official data compiled by the State Bank of Pakistan.

The data showed that exports to European countries rose 0.51pc year-on-year to $7.608 billion in July-April 2025-26. The modest increase came despite the continuation of Pakistan’s GSP+ status and has raised concerns for policymakers as exports to several major markets in the European Union remained under pressure.

The decline in exports to Western and Northern Europe was accompanied by improved sales to Southern and Eastern European countries during the same period. The ongoing conflict in the Middle East has accelerated the fall in exports to these markets, while the European Union’s preferential market access for India has added pressure for Pakistani exporters, particularly in textiles.

Trade analysts have warned that the Middle East conflict could further weaken export demand, as higher energy costs may reduce consumer spending in Europe, which is already facing strain from the economic effects of the war in Ukraine. Exporters face a broader challenge in retaining market share amid the regional conflict and rising domestic input costs.

Regional export trends

Exports to Northern Europe fell 0.79pc to $618.52 million in 10MFY26, compared with $623.47m in the same period a year earlier.

By contrast, exports to Southern Europe increased 5.75pc to $2.705bn from $2.558bn. Within that region, exports to Spain rose 7.04pc to $1.322bn from $1.235bn, while exports to Italy climbed 3.52pc to $969.44m from $936.45m. Exports to Greece, however, declined 9.85pc to $110.93m from $123.06m.

Exports to Eastern Europe also posted growth, rising 5.09pc to $620.63m in 10MFY26 from $590.57m a year earlier.

Performance in major markets

Before Brexit, the United Kingdom was Pakistan’s main export destination in Europe. In the post-Brexit period, exports to the UK slipped 0.66pc to $1.801bn in the first 10 months of FY26, compared with $1.813bn in the corresponding period last year. However, in FY25, exports to the UK had increased 7.19pc to $2.160bn from $2.015bn in the preceding year.

Western Europe continued to account for the largest share of Pakistan’s exports to the EU. The region, which includes Germany, the Netherlands, France, Italy and Belgium, saw exports decline 3.53pc to $3.664bn in 10MFY26, from $3.798bn in the comparable period.

Among individual markets, exports to Germany fell 3.53pc to $1.369bn from $1.419bn. Shipments to the Netherlands, described as the second-largest market for Pakistani goods, also dropped 3.53pc to $1.227bn from $1.272bn. Exports to France decreased 3.26pc to $457.99m from $473.43m, while exports to Belgium were down 4.23pc to $440.67m from $460.12m.

Recent annual trend

The broader annual figures showed that Pakistan’s exports to the EU had risen 7.44pc in FY25 to $8.863bn. In FY24, however, exports to the bloc had declined 3.12pc to $8.240bn.

The latest July-April figures indicate that while some European regions are absorbing more Pakistani goods, sluggish demand in major Western and Northern markets continues to weigh on overall export performance.