Pakistan’s trade deficit with nine neighbouring countries widened sharply during the first half of the current fiscal year, driven by a decline in exports and a rise in imports, official data showed.
Figures compiled by the State Bank of Pakistan indicate that the trade gap with neighbouring states including Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives reached about $7.68 billion in the first six months of fiscal year 2025–26, compared with $5.32 billion in the same period last year. This represents an increase of around 44.4 percent.
Exports to these countries fell by nearly 19 percent to approximately $1.96 billion, mainly due to reduced shipments to China, Afghanistan and Bangladesh. Trade with Afghanistan has remained suspended since October 2025, which significantly affected regional exports. Exports to China and Bangladesh also recorded declines during the period.
At the same time, imports from neighbouring countries increased by about 25 percent to nearly $9.65 billion, largely driven by higher inflows from China. Analysts say Pakistan’s growing reliance on imported goods continues to widen the trade imbalance.
Economists say the widening deficit reflects structural weaknesses in Pakistan’s export sector, including low competitiveness, limited product diversification and high production costs. They warn that unless export performance improves, pressure on foreign exchange reserves is likely to continue.
Government officials have said efforts are underway to boost exports through incentives, market diversification and trade facilitation measures. Authorities are also working to stabilize the economy under ongoing reform programs
Originally Published By: Dawn, Gulf News and State Bank of Pakistan
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