The widening trade deficit, attributed largely to surging imports from China and India, has raised eyebrows among analysts. Over the review period, imports from China saw the sharpest rise, while Pakistan’s exports to the same country took a noticeable hit.
In a surprising twist, exports to Afghanistan, Bangladesh, and Sri Lanka experienced a remarkable upswing compared to the previous year. This unexpected growth helped offset the slump in exports to China, offering some relief to Pakistan’s trade balance.
However, the ballooning deficit could spell trouble for policymakers. During FY24, the trade gap with these countries swelled to $9.506 billion—a staggering 49% increase from $6.382 billion in the prior year.
From July to November of FY25, exports to Afghanistan, Bangladesh, and Sri Lanka continued to rise, but the downward trajectory of exports to other key markets, particularly China, persisted. According to State Bank of Pakistan data, total exports to nine regional countries—Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives—rose by a modest 5.99% to $1.962 billion from $1.851 billion during the same period last year.
Meanwhile, imports surged dramatically by 31.8%, climbing to $6.436 billion in 5MFY25 from $4.883 billion the year before. Imports from China alone jumped 32.40% to $6.276 billion during this period, compared to $4.740 billion last year. In FY24, China’s imports surged by nearly 40% to $13.506 billion from $9.662 billion. China remains Pakistan’s primary import source, with India a distant second.
Exports to China, on the other hand, saw a sharp 13.9% decline in 5MFY25, falling to $1.053 billion from $1.223 billion. Imports from India also rose slightly, up 6.19% to $94.78 million in 5MFY25 from $88.91 million last year. Over the same period, exports to India remained negligible, at just $0.375 million, albeit higher than $0.069 million in the preceding year.
On a brighter note, exports to Afghanistan skyrocketed by 73.37%, reaching $406.67 million in 5MFY25, compared to $234.56 million the previous year. Imports from Afghanistan also increased, albeit modestly, from $3.18 million in 5MFY24 to $8.53 million this year.
Trade with Iran remains largely informal, with smuggling of petroleum products and LPG through Balochistan’s porous borders rampant. In an effort to curb this, Pakistan has resorted to barter trade with Iran.
Bangladesh emerged as another bright spot, with exports climbing 29.76% to $313.99 million in 5MFY25, up from $241.96 million last year. Imports from Bangladesh rose by 18% to $30.75 million. This trade boost followed political shifts in Dhaka, including the ousting of the Hasina government.
Sri Lanka also showed promise, with exports increasing by 25.3% to $183.89 million in 5MFY25, reflecting the nation’s gradual economic recovery post-recession. Conversely, shipments to Nepal dropped by 34% to $0.96 million, while exports to the Maldives edged up 5.74% to $4.0 million. Trade with Bhutan remained nonexistent during the first five months of FY25.
As the trade deficit widens, balancing this economic seesaw remains a pressing challenge for Pakistan’s policymakers.
NEWS DESK
PRESS UPDATE