Pakistan misses export target by $5.2 billion as trade deficit widens to $39.5 billion

Pakistan’s trade deficit widened by 21.57% to $39.471 billion in FY2025-26, as exports fell short of target and imports increased, according to data released by the Pakistan Bureau of Statistics (PBS). The deficit was $7 billion higher than the $32.467 billion recorded in the previous fiscal year.

Exports stood at $30.126 billion in FY2025-26, down 5.97% from $32.040 billion a year earlier.

The government had set an export target of $35.3 billion for FY2025-26 under the National Economic Transformation Plan 2024-29, meaning exports missed the target by $5.2 billion.

Imports rose 7.89% to $69.597 billion during the year, compared with $64.507 billion in FY2024-25.

The widening trade gap came as Pakistan also missed the International Monetary Fund’s tax collection target by Rs975 billion, or around $3.5 billion, during FY2025-26.

In absolute terms, exports were $1.9 billion lower than last year, nearly equal to two IMF loan tranches Pakistan usually receives annually after meeting programme conditions.

The annual trade deficit was also more than double Pakistan’s gross official foreign exchange reserves.

In June, exports declined 9.61% to $2.239 billion, compared with $2.477 billion in the same month last year. Imports in June increased 26.27% to $6.767 billion from $5.359 billion a year earlier.

As a result, the monthly trade deficit widened 57% to around $4.5 billion, increasing by $1.6 billion in absolute terms.

On a month-on-month basis, the trade deficit expanded by more than 63%, as exports fell 17% and imports rose 24%.

Higher imports were attributed to duty relaxations in the budget and higher petroleum prices following tensions in the Middle East.

Containing imports in the new fiscal year is expected to remain difficult, as imports are projected to cross $70 billion in FY2026-27.

The government has set the export target for FY2026-27 at $32.8 billion, which is 8.5% higher than actual exports of $30.1 billion in FY2025-26. The trade deficit target for FY2026-27 has been set at $37 billion, with remittances expected to help cover much of the gap.