Pakistan’s Trade Deficit with Regional Neighbours Expands by 40.42% in First Seven Months of FY25

Pakistan's trade deficit with its nine neighboring countries surged by 40.42%, reaching $6.379 billion in the first seven months of FY25, compared to $4.543 billion in the same period last year. The widening trade gap was mainly driven by a sharp rise in imports from China, India, and Bangladesh, while exports to Afghanistan, Bangladesh, and Sri Lanka showed significant growth.

Between July and January, Pakistan’s total exports to regional countries grew by 5.91% to $2.763 billion, up from $2.609 billion last year. However, imports saw a 27.83% jump, reaching $9.142 billion, compared to $7.152 billion in FY24.

Trade with China, Pakistan's largest regional trading partner, saw a decline in exports by 14.36% to $1.478 billion, while imports soared by 27.99% to $8.907 billion.

Imports from India rose by 12.21% to $135.35 million, while exports to India remained negligible at $0.40 million. On the other hand, trade with Afghanistan witnessed a sharp rise, with exports almost doubling by 94.16% to $556.86 million, whereas imports from Afghanistan stood at $15.21 million.

Trade with Bangladesh also expanded, with exports increasing by 28.74% to $465.33 million, and imports surging 44.90% to $49.05 million. The recent political shift in Dhaka has led to strengthened trade relations between the two countries. Notably, a Pakistan National Shipping Corporation (PNSC) vessel carrying 26,250 tonnes of white rice is set to reach Bangladesh on March 4, following a government-to-government deal finalized in February.

Pakistan’s exports to Sri Lanka rose by 12.34% to $256.19 million, while imports remained steady at $34.55 million. Trade with Nepal saw a slight decline, with exports at $1.62 million, while exports to the Maldives inched up to $5.53 million. No trade activity was recorded between Pakistan and Bhutan.

Despite the rising trade deficit, efforts are underway to enhance exports in agriculture and manufacturing sectors to mitigate the imbalance. However, heavy dependence on imports from China and increasing trade with India and Bangladesh continue to put pressure on Pakistan’s overall trade balance.