Pakistan’s trade deficit with neighbouring countries surges 68% in July

Pakistan’s trade deficit with nine neighbouring countries surged by 68.7% in the first month of the fiscal year 2024-25, reaching $1.041 billion, up from $617 million in the same month last year. 

According to data compiled by the State Bank of Pakistan (SBP), this sharp increase is primarily attributed to higher imports from China and India. 

In FY24, the trade deficit with these countries widened to $9.506 billion, a 49% increase from $6.382 billion in the preceding year.

Despite some growth in exports to China, Afghanistan, Bangladesh, and Sri Lanka, overall exports to the region have not kept pace with the surge in imports. 

Pakistan’s exports to its nine neighboring countries rose by 23.85% to $464.75 million in July 2024, up from $375.24 million in July 2023. However, this increase was overshadowed by a 51.66% jump in imports, which reached $1.506 billion in July 2024, compared to $993 million in the same month last year.

The bulk of these imports came from China, which saw a 53.63% increase in goods sent to Pakistan, totaling $1.478 billion in July 2024. For the entire FY24, imports from China grew by 39.78% to $13.506 billion, further exacerbating the trade imbalance.

Pakistan’s exports to China also saw a modest increase of 5.77% in July 2024, reaching $160.10 million, while for the full fiscal year, exports to China grew by 33.68% to $2.707 billion.

Trade with India also contributed to the deficit, with imports rising slightly by 0.56% to $17.75 million in July 2024. Meanwhile, exports to India remained minimal at $0.005 million. 

For FY24, Pakistan’s imports from India increased by 8.87% to $206.89 million, while exports to India stood at $3.669 million.

In contrast, exports to Afghanistan more than doubled, rising by 108% to $88.06 million in July 2024, largely due to the government’s decision to allow sugar exports to the country. However, imports from Afghanistan remained relatively low at $1.41 million.

No official trade was recorded with Iran, as most transactions between the two countries occur through informal channels.

Exports to Bangladesh grew by 8.65% to $57.86 million in July 2024, while exports to Sri Lanka surged by 59.92% to $32.72 million. Exports to Nepal also increased by 15.94%, reaching $124.55 million.

The rise in imports, particularly from China and India, continues to widen the trade deficit, posing ongoing challenges for Pakistan’s trade balance with its regional partners.