Pakistan's trade deficit narrowed by 39 percent year-on-year in May 2026, driven by a 10 percent increase in exports, according to official data. The development comes as the country continues efforts to stabilize its foreign exchange reserves amid debt repayment pressures and limited fresh inflows.
Trade Deficit Reduction Highlights
Adviser to Pakistan's finance minister, Khurram Schehzad, announced on Wednesday that the trade deficit narrowed by $409 million to $2.5 billion in May 2026, compared to $2.9 billion in the same month last year. He described this as a massive reduction and a positive indicator for the economy.
“A massive 39 percent reduction in trade deficit! Best indicators for Pakistan’s economy in May 2026: 10 percent increase in Exports, 22 percent decrease in Imports,” Schehzad said in a social media post. He added that the increase in exports and decrease in imports have significantly reduced the trade gap, signaling that the national economy is moving toward sustainability and stability.
Export and Import Data
According to the Pakistan Bureau of Statistics (PBS), exports rose by 1.26 percent from $2.67 billion in May 2025 to $2.70 billion in May 2026. Meanwhile, imports declined by 6.6 percent from $5.6 billion to $5.2 billion over the same period.
Key export products included knitwear, readymade garments, bedwear, cotton cloth, rice, towels, made-up articles, fruits, cotton yarn, and basmati rice. Major imports comprised petroleum products, crude oil, palm oil, electrical machinery, plastics, iron and steel, liquefied natural gas, mobile phones, and raw cotton.
Foreign Exchange Reserves
Pakistan's total liquid foreign exchange reserves stood at $22.65 billion as of May 29, according to the State Bank of Pakistan. The country remains heavily reliant on imported petroleum products, which continue to be a significant component of the import bill.
The narrowing trade deficit is seen as a step toward economic stability, though challenges remain in sustaining export growth and managing import dependence.
