Pakistan exports shrink in July-May as trade gap widens

ISLAMABAD: Pakistan’s merchandise exports fell 5.61pc in the first 11 months of fiscal year 2025-26, while the trade deficit expanded as imports rose faster than export earnings, data released by the Pakistan Bureau of Statistics on Wednesday showed.

PBS figures showed export receipts at $27.91 billion in July-May FY26, compared with $29.56bn in the same period a year earlier. Despite the broader decline, exports posted a slight increase in May, rising 1.26pc to $2.71bn from $2.67bn in the corresponding month last year. On a month-on-month basis, export proceeds were up 9.59pc in May.

Export trend through the fiscal year

The contraction in exports has largely persisted through the current fiscal year. Export growth remained negative from August onward, with July the only month to register year-on-year growth at 16.43pc. Export earnings fell 12.49pc in August, 3.88pc in September, 4.46pc in October, 14.54pc in November and 20.41pc in December.

In January, exports returned briefly to positive territory with growth of 3.3pc, before dropping again by 8.76pc in February and 14.4pc in March. April then saw a 14.03pc year-on-year increase, followed by the modest gain recorded in May.

The export sector had been under pressure since February because of the conflict in the Middle East. Disruptions in the Strait of Hormuz had raised shipping costs for exporters and disturbed supply chains. Trade analysts warned that if the Gulf war continues, export performance could come under further strain through disrupted trade routes, weaker demand in key regional markets and added uncertainty in global supply chains.

In the previous fiscal year, FY25, Pakistan’s export proceeds had increased 4.67pc to $32.106bn, up from $30.675bn in FY24.

Imports and trade deficit

Imports in May fell 6.63pc year-on-year to $5.28bn from $5.66bn. Compared with April, the monthly import bill declined 21.45pc.

For July-May FY26, however, the import bill rose 5.94pc to $62.66bn, against $59.15bn in the corresponding period last year. Imports in July-January FY25 had risen 6.57pc to $58.38bn from $54.78bn a year earlier.

The monthly trade deficit narrowed 13.68pc in May to $2.58bn from $2.99bn in the same month last year. Even so, the cumulative trade gap for July-May 2025-26 widened 17.48pc to $34.76bn, compared with $29.58bn in the corresponding period of the previous year.

For FY25 as a whole, the trade deficit had increased 9pc to $26.27bn, up from $24.11bn in the preceding year.