Farooq Awan

Pakistan’s import payments are expected to rise further in fiscal year 2025-26, with the country’s total import bill projected to reach $65.9 billion, a development likely to widen the trade deficit beyond $30 billion and add pressure on the external sector.

According to the Pakistan Macroeconomic Outlook FY2026 prepared by the Research and Publications Department of the Institute of Cost and Management Accountants of Pakistan (ICMA), imports are forecast to grow by 9.3 percent compared to FY25, when the country recorded $60.3 billion in goods purchases from abroad.

The projected increase reflects a continuation of the upward trend seen in recent years. Imports stood at $54.8 billion in FY24 before climbing to $60.3 billion in FY25, indicating steady growth in demand for foreign goods, particularly fuel, machinery, and other essential inputs required for domestic consumption and industrial activity.

Early data from the current fiscal year suggest that this momentum is accelerating. During the first five months of FY26, from July to November, imports reached $30.7 billion, representing a sharp 33 percent increase over the same period last year. The pace of growth during these months highlights strong domestic demand and a revival in economic activity, translating into higher purchases from international markets.

ICMA notes that energy products, capital machinery, and essential commodities continue to account for a significant share of the import bill. These items are closely tied to production, transport, and infrastructure needs, making them difficult to substitute in the short term. As industrial operations expand and consumer demand strengthens, the requirement for such imports tends to rise correspondingly.

However, the increase in imports has direct implications for the country’s trade balance. With the import bill expanding faster than other components of external trade, the trade deficit is expected to exceed $30 billion in FY26, up from $28.19 billion in FY25. The widening gap indicates that foreign exchange outflows for goods are likely to outpace inflows, intensifying pressure on the external account.

The report suggests that while higher imports may signal improving economic activity, they also underline structural challenges related to dependence on foreign supplies. Heavy reliance on imported fuel, equipment, and intermediate goods exposes the economy to global price volatility and exchange rate risks, which can affect overall stability.

Managing the pace and composition of imports, therefore, remains an important policy consideration. Encouraging domestic production of selected goods and improving efficiency in resource use could help moderate growth in the import bill over time. At the same time, ensuring that essential and productivity-enhancing imports continue to flow is necessary to sustain industrial and commercial operations.

ICMA’s projections indicate that imports will remain a dominant feature of Pakistan’s trade profile in FY26. The anticipated rise to nearly $66 billion underscores the scale of the country’s external purchasing needs and the importance of carefully balancing growth objectives with external sustainability.

As the fiscal year progresses, the trajectory of imports will play a key role in shaping the overall trade position and determining pressures on the broader external sector.

Credit: INP-WealthPk