By Ayesha Saba

Pakistan’s merchandise trade deficit narrowed 16.24% month-on-month in dollar terms in August 2026, as imports fell faster than exports, a notable improvement from July. However, the trade gap remained higher than a year earlier.

According to the latest data by the Pakistan Bureau of Statistics (PBS), available with Wealth Pakistan, the trade deficit declined to $3.306 billion in August from $3.947 billion in July. In rupee terms, the deficit fell 16.33% to Rs920.101 billion from Rs1.100 trillion.

The improvement came as imports dropped 15.22% to $5.848 billion in August from $6.898 billion in July, while exports declined 13.86% to $2.542 billion from $2.951 billion. In rupee terms, imports fell 15.33% to Rs1.626 trillion, and exports decreased 13.97% to Rs705.892 billion.

On a year-on-year basis, however, both sides of trade remained above August 2025 levels. Exports were 5.22% higher in dollar terms than the $2.416 billion recorded a year earlier, while imports increased 10.59% from $5.288 billion.

As a result, the August trade deficit was 15.11% wider in dollar terms than the $2.872 billion deficit recorded in August 2025. In rupee terms, the deficit increased 13.31% year-on-year from Rs812.001 billion.

The cumulative July-August picture also showed imports growing faster than exports. Exports rose 7.73% to $5.494 billion from $5.100 billion in the corresponding period last year, while imports increased 14.56% to $12.745 billion from $11.125 billion.

This pushed the cumulative trade deficit to $7.251 billion, 20.35% higher than $6.025 billion in July-August 2025. In rupee terms, the two-month deficit stood at Rs2.020 trillion, up 18.23% from Rs1.708 trillion.

The PBS figures also showed that petroleum crude was the largest import item in August at Rs201.173 billion, followed by petroleum products at Rs132.941 billion, and electrical machinery and apparatus at Rs85.874 billion. Crude imports increased 39.78% from July and 45.56% year-on-year, while electrical machinery imports fell 43.82% month-on-month but remained 35.73% above August 2025.

Other major imports also moved sharply during the month. Palm oil imports were Rs75.666 billion, down 24.28% from July and 20.68% year-on-year, while plastic materials stood at Rs68.191 billion, down 24.68% month-on-month but up 1.18% annually. Raw cotton imports totalled Rs47.033 billion, falling 9.33% from July but rising 47.79% from a year earlier. LNG imports reached Rs52.122 billion, up 5.99% from July but down 33.37% year-on-year.

The August data thus showed a clear month-on-month compression in the trade gap, even as the year-on-year and cumulative figures reflected a larger deficit because imports grew faster than exports.

Credit: INP-WealthPk