Western Europe exports slide as Pakistan faces mounting pressure despite GSP+

Pakistan’s exports to Western and Northern European markets have declined during the current fiscal year, offsetting gains in other regions and raising concerns about the sustainability of export growth despite continued preferential access under the European Union’s GSP+ scheme.

Latest figures compiled by the State Bank of Pakistan showed that exports to Western Europe fell by 3.22 percent to $2.952 billion during the July–February period of FY2025-26, compared with $3.050 billion in the same period last year. Shipments to Northern Europe also declined by 2.75 percent to $487.398 million, down from $501.216 million a year earlier.

Country-wise data indicated a broad slowdown across key destinations. Exports to Germany decreased by 2.37 percent to $1.108 billion, while shipments to the Netherlands, the second-largest European market for Pakistani goods, dropped by 2.21 percent to $979.79 million. Exports to France declined by 3.73 percent to $360.58 million, followed by a 3.69 percent decrease in exports to Belgium, which fell to $370.05 million during the review period.

Overall exports to European countries recorded only marginal growth, increasing by 0.95 percent to $6.122 billion in the first eight months of FY26, compared with $6.064 billion in the corresponding period last year, reflecting slowing demand in Pakistan’s traditional markets.

In contrast, exports to Southern and Eastern Europe registered moderate increases. Shipments to Southern Europe rose by 7.16 percent to $2.171 billion in 8MFY26 from $2.026 billion a year earlier. Within this region, exports to Spain grew by 7.52 percent to $1.049 billion, while exports to Italy increased by 5.53 percent to $790.85 million. However, exports to Greece declined by 5.87 percent to $86.62 million during the same period.

Exports to Eastern Europe also posted growth of 5.06 percent, reaching $510.797 million in 8MFY26 compared with $486.183 million in the same months last year.

Trade with the United Kingdom remained largely stable in the post-Brexit period, with exports edging down slightly by 0.13 percent to $1.441 billion in 8MFY26 from $1.443 billion a year earlier. However, exports to the UK increased by 7.19 percent to $2.160 billion in FY25, compared with $2.015 billion in the preceding year.

Analysts have warned that external developments could further weigh on export performance. They pointed to the European Union’s recent free trade agreement with India, a key competitor in the textile sector, and the potential impact of rising energy costs linked to ongoing tensions in the Middle East and the economic fallout from the Russia–Ukraine War.

They cautioned that higher energy prices and weaker consumer purchasing power in Europe could dampen demand for imported goods, posing additional challenges for Pakistani exporters attempting to retain market share in the region.