Pakistan's current account swings back to surplus in January

Pakistan’s current account returned to surplus in January 2026, recording a positive balance of $121 million compared to a deficit of $265 million in December 2025, according to data released by the State Bank of Pakistan (SBP).

The latest reading marks a notable month-on-month improvement and signals renewed stability in the country’s external account position after a volatile end to 2025. In December, the current account had slipped into negative territory, reflecting higher import payments and seasonal pressures. January’s rebound suggests a moderation in outflows or an uptick in inflows, helping the balance swing back into surplus.

A review of recent trends shows that Pakistan’s external account has experienced sharp monthly fluctuations over the past year. After posting deficits during mid-2024, the country moved into surplus territory in several months toward the latter part of the year, including a particularly strong performance in March 2025. However, the momentum proved uneven, with deficits re-emerging in the middle and closing months of 2025 before the latest turnaround.

Cumulatively, the broader picture remains mixed. During the first seven months of FY26 (July–January), the current account recorded a deficit of $1.07 billion, compared to a surplus of $560 million in the same period of FY25. This reversal highlights the pressure on the external sector compared to last year’s relatively stronger position.

The current account balance is a key indicator of a country’s external stability, capturing the net flow of goods, services, primary income and secondary income. A surplus indicates that foreign exchange inflows exceed outflows, easing pressure on foreign exchange reserves and the exchange rate. Conversely, a deficit can strain reserves and increase reliance on external financing.

January’s surplus is likely to provide some breathing space for policymakers managing the exchange rate and foreign exchange reserves. However, with cumulative figures still showing a deficit for FY26 so far, sustaining monthly surpluses will be crucial to maintaining external stability in the months ahead.

Market participants will now be watching whether the January improvement marks the beginning of a steadier trend or proves to be another short-term fluctuation in an otherwise fragile external account trajectory.