Pakistan Feb. imports fall 1.61% YoY

Pakistan Feb. imports fall 1.61% YoY

Pakistan’s Trade Deficit Widens in February Amid Export Slump

According to Mettis Global News, Pakistan’s trade deficit expanded by 8% in February 2026 compared to the same period in 2025, driven by a decline in exports and a relatively smaller drop in imports. While imports fell 1.61% year-over-year (YoY), reflecting modest restraint in external demand, the country’s export performance continued to lag, exacerbating the imbalance.

The trade deficit with nine regional countries rose by 41.32% in 2025, with China remaining the largest trade partner. Pakistan exported $1.467 billion to China in 2025, a marginal decline from $1.482 billion in 2024, while imports from China surged to $11.097 billion, up 24.58% YoY. This widening gap underscores structural challenges, including a difficult business environment, weak governance, and insufficient investment in competitive sectors, as highlighted by the International Monetary Fund (IMF).

Geopolitical factors and security concerns have further constrained exports to key markets such as Afghanistan and India. Meanwhile, global uncertainties, including the Russia-Ukraine war and Middle East tensions, have disrupted supply chains and reduced demand for Pakistani goods. Additionally, India’s impending free trade agreement with the European Union poses a competitive threat to Pakistan’s exports, which currently benefit from EU’s GSP+ preferential trade status.

Domestically, the government faces hurdles in implementing reforms to boost exports. A recent National Assembly committee noted that $4.629 billion allocated for export acceleration for small and medium enterprises (SMEs) remains unutilized due to inter-ministerial disagreements. The IMF’s conditions—such as full-cost recovery for utilities and limited fiscal incentives for industries—have also constrained growth-oriented policies, though recent subsidies for rice exporters signal partial adjustments.

Analysts emphasize the need for targeted investments in technology-driven manufacturing and value addition to enhance export competitiveness. Collaboration with partners like China could provide critical support in adopting cost-efficient production methods. Without structural reforms, Pakistan’s trade deficit and economic volatility are likely to persist.

According to Mettis Global News: Mettis Global News, February 2026.
Business Recorder Editorial: Business Recorder Editorial, 2026.