Farooq Awan

Pakistan’s merchandise trade deficit widened sharply to $3.705 billion in December FY26 as exports declined steeply while imports remained elevated, according to the Monthly Trade Report released by the Trade Development Authority of Pakistan (TDAP).

The TDAP report shows that goods exports fell 20.41 percent year-on-year to $2.317 billion in December, compared to $2.911 billion in the same month last year, indicating a sharp contraction in export receipts.

In contrast, imports stood at $6.022 billion in December, up from $5.904 billion in December FY25, reflecting a year-on-year increase of 2 percent. The combined impact of falling exports and sustained imports resulted in a trade deficit of $3.705 billion, higher than the $2.993 billion recorded in December last year.

According to the TDAP report, during the first half of FY26 (July–December), Pakistan’s goods exports declined by 8.70 percent to $15.184 billion, compared with $16.631 billion in the corresponding period of the previous fiscal year. Over the same period, imports increased by 11.28 percent to $34.388 billion, up from $30.902 billion a year earlier.

As a result, the cumulative trade deficit during July–December FY26 widened to $19.204 billion, compared with $14.271 billion in the same period last year, according to official figures compiled by TDAP.

The TDAP report notes that the decline in December exports was observed across multiple sectors, while imports remained high due to continued inflows of energy products, consumer goods, and industrial inputs, keeping pressure on the external account.

The report further indicates that Pakistan’s services trade recorded a comparatively better performance during the period, which helped partially offset pressures from the merchandise trade account, although it was insufficient to counterbalance the widening goods trade deficit for December.

The Monthly Trade Report provides a detailed breakdown of Pakistan’s trade performance, including country-wise, sector-wise, and product-wise data, outlining the factors that shaped the overall trade position during December FY26 and the first half of the fiscal year.

Credit: INP-WealthPk