Trade deficit narrows 39% as imports fall

Monthly gap improves by Rs470b, but July-May deficit widens 18%

KARACHI:

Pakistan's merchandise trade deficit narrowed by 39.46% month-on-month in May 2026, driven by a sharp decline in imports and a rise in exports, according to data released by the Pakistan Bureau of Statistics.

The trade deficit stood at Rs721.6 billion in May 2026, compared with Rs1.19 trillion in April 2026. This represents an improvement of around Rs470.4 billion over the previous month, reflecting a significant easing of external sector pressures on a monthly basis.

Exports increased to Rs753.7 billion in May from Rs688.7 billion in April, registering a 9.45% month-on-month increase. Imports, meanwhile, fell by 21.55% to Rs1.48 trillion from Rs1.88 trillion in April. This combination of rising exports and falling imports helped narrow the trade gap substantially during the month.

On a year-on-year basis, the trade deficit contracted by 14.35% from Rs842.5 billion in May 2025 to Rs721.6 billion in May 2026. Exports remained largely flat, edging up just 0.18% from Rs752.4 billion in May 2025 to Rs753.7 billion in May 2026. Imports declined by 7.50% from Rs1.59 trillion to Rs1.48 trillion during the same period, contributing to the improvement in the trade balance compared with the same month last year.

However, the cumulative trade position during July-May FY2025-26 showed continued pressure on the external sector. The trade deficit widened by 18.34% to Rs9.78 trillion, compared with Rs8.26 trillion in the corresponding period of FY2024-25. This widening indicates that while monthly improvements are visible, the overall trajectory remains concerning.