Pakistan's trade deficit with Middle East narrows 4.5% in FY26 despite drop in exports

Pakistan's trade deficit with the Middle East narrowed 4.48% to $13.32 billion in FY26, as imports declined faster than exports amid ongoing geopolitical tensions in the region. 

According to data compiled by the State Bank of Pakistan (SBP), exports to the Middle East fell more than 2% year-on-year to $3.093 billion, while imports declined 4% to $16.413 billion during the fiscal year.

The decline in exports reflects the impact of the continuing conflict in the Middle East on Pakistan's trade with the region. Shipments to Saudi Arabia, Qatar, Bahrain and Jordan decreased during FY26, while exports to Kuwait recorded an increase. 

Exports to the United Arab Emirates (UAE), Pakistan's largest export destination in the region, remained largely unchanged.

On the import side, lower purchases from Bahrain, Qatar and Kuwait drove the overall decline. However, imports from the UAE, Saudi Arabia and Jordan increased during the fiscal year.

The data showed that June marked the fourth monthly contraction in imports since March, indicating that Pakistan's import flows remain highly sensitive to geopolitical developments, particularly disruptions affecting regional energy corridors.

Pakistan continues to depend heavily on the Gulf for its energy needs, with the UAE and Saudi Arabia accounting for around 90% of the country's energy imports from the region. Other suppliers, including Qatar, Kuwait, Oman and Bahrain, contribute a comparatively smaller share despite their export capacity.

The narrower trade gap follows a deterioration in the previous fiscal year. Pakistan's trade deficit with the Middle East had widened 7.37% to $13.97 billion in FY25, compared with $13.01 billion in FY24, before easing to $13.32 billion in FY26.

Among individual markets, exports to Saudi Arabia fell 3% to $682.56 million in FY26, down from $706.04 million a year earlier.