ISLAMABAD: Pakistan’s trade deficit with its nine neighbouring countries expanded significantly by 34.54 percent during the first quarter of the current fiscal year (FY26), climbing to $3.93 billion from $2.921 billion in the same period last year.
This widening gap is primarily attributed to an overall decline in Pakistan’s exports to regional nations. A notable exception was China, which saw a marginal recovery in Pakistani exports. Sri Lanka also recorded a slight increase, while shipments to key partners like Bangladesh and Afghanistan experienced negative growth, according to the latest data from the State Bank of Pakistan.
This quarterly trend follows a similar pattern from the previous fiscal year, where the full-year trade deficit with these nations had expanded by 29.42 percent to $12.297 billion.
A detailed breakdown of the figures reveals that Pakistan’s exports to the nine countries—Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives—contracted by 5.07 percent to $1.011 billion in the July-September period of FY26, down from $1.065 billion last year. This is in contrast to the full FY25, where annual exports had seen a modest increase of 1.49 percent.
Conversely, imports into Pakistan from these neighbours surged by 23.95 percent to $4.941 billion in the first three months of FY26, compared to $3.986 billion in the same period last fiscal year. Over the entirety of FY25, imports had risen by 20.66 percent.
Country-Specific Performance:
- China: Imports from China, which constitute the bulk of regional purchases, rose sharply by 24.92 percent to $4.861 billion. Pakistani exports to China saw a slight uptick of 0.59 percent to $562.39 million.
- India: Imports from India fell by 36.41 percent to $36.55 million. Exports to India remained minimal at $1.95 million.
- Afghanistan: Exports to Afghanistan declined significantly by 19.83 percent to $161.83 million. Imports from Afghanistan were recorded at $4.52 million.
- Bangladesh: Exports to Bangladesh dropped by 4.93 percent to $180.15 million.
- Sri Lanka: Exports to Sri Lanka decreased by 8.32 percent to $102.56 million, while imports from the country increased by 19.68 percent to $17.33 million.
The data also noted that most trade with Iran occurs through informal channels and is not officially recorded. Meanwhile, very little trade was documented with the Maldives and Nepal during the review period.
