Pakistan's external trade position has deteriorated markedly in the current fiscal year, with a widening deficit driven by declining exports and rising imports.

According to data released by the Pakistan Bureau of Statistics, the country's merchandise exports fell by 7.30% to $20.46bn during July-February 2025-26, compared with $22.07bn in the same period last year. In contrast, imports increased by 8.06%, reaching $45.50bn from $42.11bn.

As a result, the trade deficit expanded by 24.98% to $25.04bn, up from $20.04bn a year earlier. The widening gap underscores mounting pressure on the external account amid diverging trends in exports and imports.

Short-term data offer little relief. On a year-on-year basis, exports declined by 8.76% in February 2026, falling to $2.27bn from $2.49bn in February 2025. Imports also edged down slightly by 1.61% to $5.25bn during the same month.

Month-on-month comparisons indicate further contraction. Exports dropped sharply by 25.63% in February compared with January's $3.06bn, while imports decreased by 9.51% from $5.81bn.

The figures highlight a challenging trade environment, where shrinking export earnings and elevated import spending continue to widen the deficit, despite some easing in monthly flows.