Strong remittance inflows, improved financial account performance, and stable foreign exchange reserves help Pakistan maintain a current account surplus during FY2026.
ISLAMABAD: Pakistan’s external sector demonstrated remarkable resilience during the first nine months of FY2026, recording a current account surplus of US $72 million despite mounting global economic uncertainties and regional geopolitical tensions.
The positive balance was achieved during the July–March period, reflecting the country’s improved economic management and strong inflows from overseas Pakistanis.
One of the major contributors to the surplus was the continued growth in workers’ remittances. During July–March FY2026, remittances increased by 8.2 percent, reaching US $30.3 billion.
The rise was largely supported by government policies and regulatory measures designed to encourage overseas Pakistanis to use formal banking channels for money transfers.
The global economic environment remained challenging throughout the period. International trade faced disruptions following significant tariff increases imposed by the United States in 2025, resulting in greater trade restrictions and policy uncertainty worldwide.
Conditions became even more difficult in February 2026 when escalating tensions in the Middle East triggered volatility in energy markets, increased shipping and insurance costs, and disrupted regional trade routes and supply chains.
Despite these external pressures, Pakistan managed to maintain stability through strong remittance inflows, lower primary income payments, and improved financial account performance.
However, the country’s merchandise trade deficit widened to US $27.9 billion, compared to US $22.7 billion during the same period last year. The increase was mainly driven by a 6.9 percent rise in imports, reflecting recovering domestic economic activity.
Exports, meanwhile, remained under pressure and declined by 8 percent due to weaker global demand and geopolitical disruptions affecting trade and shipping channels.
On a positive note, the services sector showed improvement as the services deficit narrowed to US $2.1 billion from US $2.3 billion a year earlier. This was primarily supported by a 19.8 percent increase in information technology exports, which outpaced growth in services imports.
Pakistan also benefited from a reduction in the primary income deficit, which fell by US $364 million to US $6.4 billion due to lower interest payments.
The financial account recorded a net inflow of US$194 million, reversing the US$1 billion net outflow recorded last year, largely because of higher official disbursements.
Foreign exchange reserves reached US $21.8 billion by the end of March 2026, including US $16.4 billion held by the State Bank of Pakistan and US $5.4 billion with commercial banks. These reserves helped maintain exchange rate stability, with the rupee averaging Rs281.1 per US dollar during the period. Looking ahead, the IMF expects global trade growth to slow to 2.8 percent in 2026 before recovering moderately to 3.8 percent in 2027, indicating that external challenges may continue in the near term.
