Moaaz Manzoor

Pakistan’s exports started FY26 with modest overall growth, while August figures were dragged down by short-term volatility. According to fresh data from the Pakistan Textile Council (PTC) available to Wealth Pakistan, exports during July–August FY26 totalled USD 5.1 billion, representing a slight 0.65% increase compared to USD 5.07 billion in the same period of FY25.

However, August 2025 performance underscored near-term challenges, with exports declining to USD 2.42 billion, a 12.5% year-on-year fall from USD 2.76 billion in August 2024, and down 10% from USD 2.69 billion in July 2025.

The textile and apparel sector remained the backbone of the export basket, contributing USD 3.21 billion in July–August FY26, up 10% from USD 2.93 billion in the same period of FY25. But even textiles were not immune to monthly weakness, slipping to USD 1.53 billion in August, a 7% year-on-year and 9% month-on-month decline.

Export destinations displayed varied performances. The European Union retained its position as the top market with USD 1.3 billion in shipments, while exports to the United States were flat at USD 878 million. The exports to the United Kingdom showed steady growth to USD 309 million, whereas Bangladesh and the UAE accounted for USD 121 million and USD 101 million, respectively.

PTC noted that while the EU remained an anchor market, Pakistan’s heavy reliance on a few destinations increased external vulnerability. Adding to these pressures, recurring natural disasters are an emerging economic risk,  warned a report titled “Floods 2025 – Climate crisis hits Pakistan again” by Muhammad Waqas Ghani, Head of Equity Research at JS Global Capital, available to Wealth Pakistan.

Flood damage to crops such as cotton, rice, and wheat may weigh on exports and widen the current account deficit by up to USD 1.8 billion through higher imports and lower textile and agri-based exports. Ghani cautioned that cotton losses would particularly hurt the textile sector, raising import requirements and increasing costs for exporters.

Meanwhile, the council stressed that sustaining export growth would require urgent structural reforms and a more predictable policy environment. It called for regionally competitive and predictable energy pricing for export-oriented industries, removal of liquidity and tax frictions through automated refunds and zero-rated inputs, and labour policies aligned with regional competitors to restore cost competitiveness.

Strengthening EXIM Bank, expanding financing schemes for innovation and renewable energy, and introducing a five-year export and industrial policy with legal cover were also highlighted as essential steps.

Credit: INP-WealthPk