Pakistan’s trade deficit with its nine neighbouring countries widened by 34.54% in the first quarter of the current fiscal year (FY26), reaching $3.93 billion compared to $2.92bn during the same period last year, according to data released by the State Bank of Pakistan.
The rise in deficit was primarily attributed to a decline in exports to most regional partners, except China and Sri Lanka, where exports showed modest recovery. Pakistan’s shipments to Bangladesh and Afghanistan, however, registered negative growth in July–September FY26.
China remains Pakistan’s largest regional trading partner. Imports from China increased 24.92% to $4.86bn in July–September FY26, up from $3.89bn in the same period last year. Exports to China edged up 0.59% to $562.4m compared to $559.1m during the same period last year.
Total exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives dropped 5.07% to $1.01bn in the first three months of FY26 from $1.07bn in the same period last year. In contrast, imports from these countries rose sharply by 23.95%, reaching $4.94bn from $3.99bn a year earlier.
The widening gap follows a similar trend seen in FY25, when Pakistan’s regional trade deficit expanded by 29.42% to $12.30bn compared to $9.50bn in the preceding fiscal year.
Imports from India declined 36.41% to $36.6m in the first quarter of FY26, down from $57.5m a year earlier. Exports to India remained minimal at $1.95m, similar to last year’s levels.
Exports to Afghanistan fell 19.83% to $161.8m from $201.9m last year, while imports from Afghanistan were recorded at $4.5m, down from $6.4m a year ago.
Pakistan’s exports to Bangladesh decreased by 4.93% to $180.2m from $189.5m in the same period last year, whereas exports to Sri Lanka slipped 8.32% to $102.6m from $111.9m. Imports from Sri Lanka, however, rose 19.68% to $17.3m.
Trade with Iran, Nepal, Bhutan, and the Maldives remained minimal, with most commerce with Iran taking place through informal channels.
