ISLAMABAD, Pakistan — The Pakistan trade deficit widened to $19.2 billion in the first half of fiscal 2025-26 (July-December 2025), as exports fell and imports rose at a double-digit pace, official data showed. The swing is renewing scrutiny of how Pakistan will fund higher dollar demand without destabilising the currency, Jan. 3, 2026.
The latest Pakistan Bureau of Statistics (PBS) foreign trade release for December 2025 shows imports rose 11.28% year over year to $34.4 billion in H1 FY26, while exports slipped 8.7% to $15.18 billion.
Pakistan trade deficit in H1 FY26: the key numbers
Trade gap: $19.2 billion, up 34.6% from H1 FY25
Imports: $34.4 billion, up 11.28%
Exports: $15.18 billion, down 8.7%
Business Recorder’s summary of the PBS data said the first-half deficit compares with $14.27 billion in the same period of FY25, and is already close to two-thirds of the government’s full-year target.
December’s numbers show why the gap widened so quickly. Exports fell 20.4% year over year to $2.32 billion, while imports rose to $6.02 billion, leaving a monthly deficit of about $3.7 billion, according to The News International’s report citing PBS figures.
What’s driving the Pakistan trade deficit
Import duties were reduced in the FY26 budget, and the import bill has stayed above $5 billion for months, with December crossing $6 billion for the first time this fiscal year, The Express Tribune reported. The newspaper said exporters have complained the rupee is overvalued, while the Federal Board of Revenue ordered field formations to pick at least 70 exporters for income-tax scrutiny, adding compliance costs at a time when shipments are already under strain.
Economists say exports typically respond to tariff liberalisation with a lag. In that gap, a wider trade balance tends to translate into heavier demand for dollars—forcing policymakers to lean on remittances, reserve buffers and tighter demand management.
Pakistan trade deficit context: a stop-start pattern
In FY24, the commerce minister told lawmakers the overall trade deficit narrowed to $24.11 billion from $27.47 billion a year earlier, helped by lower imports and slightly higher exports, according to a Daily Times report.
As FY26 began, early signs pointed to renewed import pressure. In July 2025, the deficit jumped 44% as tariff cuts kicked in and importers brought forward shipments to benefit from reduced rates, The Express Tribune reported in August 2025.
Pakistan tightened imports in 2022 to protect shrinking reserves, then began easing restrictions under IMF-linked conditions. A 2023 Reuters report on the rupee hitting a record low as import curbs eased showed how quickly the external balance can shift when trade flows reopen.
What happens next for the Pakistan trade deficit
Whether the Pakistan trade deficit keeps widening will depend on how quickly exports recover and whether import growth cools as inventories normalize. If exports stay weak and the import bill remains elevated, Islamabad could face renewed balance-of-payments stress and heavier pressure on the rupee.
