Regional trade deficit widens sharply

ISLAMABAD: Pakistan’s trade deficit with nine neighbouring countries widened by 26.62 per cent to $4.97 billion during the first quarter of 2026-27 compared to $3.93bn in the corresponding period last year.

The widening gap reflects a contraction in Pakistan’s exports to regional markets, largely due to reduced shipments to Afghanistan and Bangladesh.

Trade with Afghanistan, including exports, has remained suspended since Oct 10, 2025, further weighing on overall export performance.

Imports from China rose sharply during the July-September quarter, contributing significantly to the widening imbalance. Consequently, the bilateral deficit with China widened by $858.808 million, accounting for approximately 82.18pc of the increase in the combined deficit with the nine countries.

Gap with nine neighbours rises 26.6pc to $4.97bn in July-September

Exports to China rose marginally, while exports to Nepal also grew in percentage terms, though the increase remained negligible in dollar value.

In contrast, shipments to Afghanistan, Bangladesh and Sri Lanka declined, according to the latest data compiled by the State Bank of Pakistan.

Exports to nine countries—Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives—fell 6.72pc to $944.24mn in July to September of FY27, down from $1.01 billion in the same period last year.

By contrast, imports surged 19.79pc to $5.92bn in 3MFY27 from $4.94bn in the same months of the previous fiscal year.

Further analysis showed that imports from China grew 19.76pc to $5.82bn in 3MFY27, up from $4.85bn over the same period last year. Pakistan’s exports to China grew 17.95pc to $663.57m in 3MFY27 from $562.56m in the same months of the preceding fiscal year.

Imports from India increased by 68.90pc to $61.74m in 3MFY27 from $36.55m over the last year. Meanwhile, no exports to India were recorded in the first quarter of FY27.

Exports to Afghanistan fell 88.34pc to $18.86m in 3MFY27, down from $161.76m last year. Imports stood at $0.25m in 3MFY27, compared with $4.52m in FY26, a decline of 94.40pc.

Pakistan’s exports to Bangladesh declined by 2.96pc to $174.77m in 3MFY27 from $180.12m over the last year. Imports dipped 36.11pc to $13.88m in 3MFY27 from $21.73m over the last year.

Published in Dawn, October 27th, 2026