Pakistan’s external trade position came under pressure in July 2026 as the country’s trade deficit increased significantly compared with the same month last year. According to data released by the Pakistan Bureau of Statistics (PBS), the trade gap widened by 25.17% year-on-year, reaching $3.948 billion compared with $3.154 billion in July 2025.
The rise in the deficit was mainly driven by a sharper increase in imports compared with export growth. During July 2026, Pakistan’s exports improved by 9.54% year-on-year to $2.939 billion, up from $2.683 billion recorded in the same month a year earlier. However, imports grew at a much faster pace, climbing 18% to $6.887 billion from $5.837 billion in July 2025.
Exports Show Positive Momentum
The increase in exports reflects a gradual improvement in Pakistan’s ability to generate foreign exchange through international trade. Export earnings rose by nearly $256 million compared with July last year, suggesting stronger performance from key exporting sectors.
On a monthly basis, exports recorded a substantial improvement, rising 31.09% from $2.242 billion in June 2026 to $2.939 billion in July. This monthly jump indicates improved export activity at the beginning of the new financial year.
Rising Imports Put Pressure on Trade Balance
Despite stronger exports, the rapid increase in imports remained a challenge. Imports expanded by $1.05 billion compared with July 2025, reflecting higher demand for foreign goods, raw materials, machinery, and other imported products.
The faster growth in imports compared with exports resulted in a wider trade imbalance, highlighting Pakistan’s continued dependence on imported goods and the need to strengthen domestic production capacity.
Monthly Deficit Shows Improvement
While the annual trade deficit widened, the month-to-month trend showed some improvement. The trade deficit declined by 15.22%, falling from $4.657 billion in June 2026 to $3.948 billion in July.
This improvement came as exports increased sharply during the month, while imports remained almost stable, declining slightly by 0.17% from June’s level of $6.899 billion.
Impact in Rupee Terms
The trade deficit also increased when measured in Pakistani rupees. The deficit rose 22.73% year-on-year to Rs1.10 trillion in July 2026 compared with Rs896.388 billion in July 2025.
Exports in rupee terms reached Rs817.246 billion, showing a 7.17% annual increase, while imports climbed 15.58% to Rs1.917 trillion.
On a monthly basis, rupee-based exports improved by 30.94%, while imports decreased marginally by 0.29%. As a result, the rupee trade deficit narrowed by 15.3% compared with June 2026.
Outlook for Pakistan’s Trade Sector
The latest figures present a mixed picture for Pakistan’s economy. The improvement in exports is a positive development and indicates progress in earning foreign currency through trade. However, the continued faster growth of imports remains a major concern for the country’s external balance.
To reduce the trade gap over the long term, Pakistan will need to focus on expanding export industries, increasing value-added exports, encouraging local manufacturing, and reducing reliance on imported products.
Although July’s monthly performance offers some relief, maintaining export growth while managing import demand will remain crucial for achieving a more sustainable trade position.