Pakistan’s Trade Gap with Neighbors Surges 44pc in first FY2026

DID Press: Pakistan’s trade deficit with nine neighboring countries surged 44.4pc to $7.683 billion in the first half of fiscal year 2026, driven primarily by declining regional exports and significant import growth.

According to the State Bank of Pakistan, the deficit with China, Afghanistan, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan, and the Maldives rose sharply from $5.32 billion during the same period last year.

Exports to these neighbors fell 18.56% to $1.965 billion, with the largest drops recorded in trade with China, Afghanistan, and Bangladesh. In contrast, imports grew 24.76% to $9.648 billion, with China remaining Pakistan’s largest source of imports at $9.472 billion—a 25.61% increase—while exports to China fell 5.59% to $1.216 billion.

Trade with Afghanistan weakened sharply, with exports down over 56% to $219.4 million, following a suspension of all trade between the two countries from October 10, 2025. Exports to Bangladesh and Sri Lanka also declined 7.54% and 27.13%, respectively, while imports from these nations rose slightly.

The State Bank noted that Pakistan’s trade deficit with these neighbors grew 29.42% in fiscal year 2025 to $12.297 billion, reflecting ongoing structural challenges and persistent regional trade pressures.