Record remittances cushion external account, but widening trade gap pushes balance back into deficit
KARACHI: Pakistan recorded a current account deficit (CAD) of $139 million in fiscal year 2025-26 (FY26) as a sharp rise in imports outpaced modest export growth, reversing the $1.84 billion surplus posted in the previous fiscal year.
According to the latest balance of payments data, the country’s external account remained under pressure despite record workers’ remittances and strong growth in services exports. Higher import demand widened the trade gap, offsetting gains from external inflows.
Imports grow faster than exports
Pakistan’s total exports reached $40.9 billion in FY26, representing a marginal 0.2% year-on-year (YoY) increase from $40.8 billion in FY25.
The improvement was driven by a 18.7% increase in services exports, although goods exports declined 4.6% during the fiscal year.
In contrast, total imports climbed 8.5% YoY to $76.4 billion, reflecting stronger domestic demand and higher import activity.
Goods imports: up 9.0%
Services imports: up 5.7%
As a result, Pakistan’s trade deficit widened 19.8% to $35.5 billion in FY26.
June current account deficit widens
During June 2026, Pakistan recorded a current account deficit of $649 million, compared with a $220 million deficit in the same month a year earlier.
Monthly imports increased 19.5% YoY to $7.1 billion, while exports rose 8.0% to $3.6 billion, leading to a wider external gap.
Record remittances support external stability
Workers’ remittances remained the country’s largest source of foreign exchange inflows.
Pakistan received a record $41.6 billion in remittances during FY26, an increase of 8.6% over the previous fiscal year.
Overall secondary income reached $43.8 billion, rising 8.7% YoY, with remittances accounting for the overwhelming share of inflows.
In June 2026, overseas Pakistanis sent $3.5 billion, up 2.0% from a year earlier but 18.3% lower than in May due to a seasonal decline following strong festive-period transfers.
Primary income deficit improves
Pakistan’s net primary income deficit narrowed 4.5% during FY26 to $8.4 billion, compared with $8.8 billion in FY25.
For June alone, the primary income deficit stood at $819 million, slightly higher than $791 million recorded in June last year.
Financial account slips into deficit
Pakistan’s financial account recorded a $1.76 billion deficit in June 2026.
For the full fiscal year, the financial account posted a $1.21 billion deficit, compared with a $1.59 billion surplus in FY25, indicating relatively weaker capital and financial inflows.
REER edges higher
The Real Effective Exchange Rate (REER) increased slightly to 106.44 in June 2026, up from 106.15 in May, suggesting a modest appreciation in Pakistan’s real exchange rate.
Outlook
While Pakistan returned to a modest current account deficit in FY26, record workers’ remittances and resilient services exports helped cushion pressure on the external sector. However, the sharp rise in imports and widening trade deficit underscore the need to boost exports, attract sustained foreign investment and strengthen foreign exchange inflows to maintain external sector stability in the coming fiscal year.