Pakistan’s Regional Trade Deficit Surges 34.54% to $3.93B

ISLAMABAD: Pakistan’s trade deficit with its nine neighbouring countries swelled by 34.54% in the first quarter of FY26 (July–September), ballooning to $3.93 billion from $2.92 billion a year earlier, according to State Bank of Pakistan (SBP) data.

The escalating deficit stemmed primarily from a decline in exports to most regional partners, except for modest gains to China and Sri Lanka. Shipments to Bangladesh and Afghanistan registered negative growth during July–September FY26.

China remains Pakistan’s dominant regional trading partner, with imports surging 24.92% to $4.86 billion from $3.89 billion last year. Exports to China inched up 0.59% to $562.4 million from $559.1 million.

Overall exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives plummeted 5.07% to $1.01 billion from $1.07 billion, while imports from these nations soared 23.95% to $4.94 billion from $3.99 billion.

This mirrors FY25’s trend, where the regional trade deficit widened by 29.42% to $12.30 billion from $9.50 billion.

Imports from India dropped 36.41% to $36.6 million from $57.5 million, with exports to India stagnant at $1.95 million. Exports to Afghanistan fell 19.83% to $161.8 million from $201.9 million, and imports from Afghanistan declined to $4.5 million from $6.4 million.

Exports to Bangladesh dipped 4.93% to $180.2 million from $189.5 million, while exports to Sri Lanka slid 8.32% to $102.6 million from $111.9 million. Conversely, imports from Sri Lanka rose 19.68% to $17.3 million.

Trade with Iran, Nepal, Bhutan, and the Maldives remained negligible, with Iran’s commerce largely occurring through informal channels.