By Ayesha Saba

Pakistan’s external account showed improvement during the current fiscal year, with the current account posting a surplus and remittances continuing to play a key supporting role.

According to the “Monthly Economic Update & Outlook April 2026” released by the Finance Division and available with Wealth Pakistan, the current account recorded a surplus of $1.1 billion in March 2026, contributing to an overall surplus of $8 million during July-March FY2026.

The data shows that the improvement in the external account was largely supported by strong inflows of workers’ remittances, which increased by 8.2% to $30.3 billion during July-March FY2026, compared to $28.0 billion in the same period last year.

Remittance inflows were primarily driven by contributions from Saudi Arabia and the United Arab Emirates, which accounted for 23.4% and 20.7% of total inflows, respectively.

Despite the improvement in the current account, the trade balance showed a widening deficit. Goods and services exports stood at $30.6 billion during July-March FY2026, slightly lower than $31.0 billion recorded in the corresponding period last year.

Within exports, goods exports amounted to $23.3 billion, while services exports were supported by IT services, which increased by 19.8% to $3.4 billion.

On the import side, goods and services imports increased to $56.3 billion during the period, compared to $52.0 billion in the same period last year. Goods imports accounted for $46.8 billion of the total.

As a result, the trade deficit in goods and services widened to $25.7 billion, compared to $21.0 billion a year earlier, reflecting higher import volumes and costs.

The report highlights that increases in key export categories were recorded in garments, which rose by 3.8%, and bedwear, which increased by 0.3%. On the import side, petroleum crude imports increased by 11.3%, while palm oil imports rose by 17.5%.

At the same time, petroleum product imports showed a decline of 7.5%, providing some offset to the overall increase in import values.

Foreign direct investment (FDI) inflows were recorded at $1.4 billion during the period. The main sources of inflows were the Chinese mainland, which contributed $678.6 million, and China’s Hong Kong Special Administrative region, which added $253.7 million.

Sector-wise, the power sector attracted $714.2 million in FDI, while financial business accounted for $588.7 million, indicating sectoral concentration of investment flows.

The report also notes that portfolio investment recorded net outflows, with private sector outflows of $550.3 million and public sector outflows of $393.5 million during the period.

The data indicates that while the current account has improved due to strong remittance inflows, the widening trade deficit continues to influence the overall external balance, as reflected in the official statistics.

Credit: INP-WealthPk