By Abdul Ghani

Pakistan recorded a current account surplus of $427 million in February 2026, marking the highest monthly surplus of the fiscal year, supported by higher remittances and a decline in imports, according to the Monthly Economic Update & Outlook released by the Finance Division.

The improvement in the external account helped contain the cumulative current account deficit to $700 million during Jul-Feb FY2026, reflecting a more stable external position compared to earlier months.

A key factor behind the February surplus was the strong growth in remittances. During the first eight months of FY2026, remittance inflows increased by 10.5 percent to reach $26.5 billion. These inflows continued to provide a steady source of foreign exchange, helping offset pressures from trade imbalances.

On the trade side, exports and imports showed mixed trends. Total goods and services exports during Jul-Feb FY2026 stood at $27.2 billion, slightly lower than $27.4 billion recorded in the same period last year. Goods exports were recorded at $20.7 billion, with the textile sector contributing significantly to overall performance.

Within export categories, modest gains were observed in knitwear (0.4%), garments (4.9%), and bedwear (1.0%). However, the overall export performance remained subdued due to a decline in food exports, particularly rice.

In contrast, services exports showed stronger growth, driven mainly by IT services. IT exports increased by 19.7 percent to $3.0 billion during the period, providing additional support to the external account.

Imports, however, continued to rise. Total goods and services imports reached $50.4 billion during Jul-Feb FY2026, compared to $46.0 billion in the same period last year. Goods imports alone were recorded at $41.8 billion.

The increase in imports widened the overall trade deficit in goods and services to $23.2 billion, up from $18.6 billion last year. Higher imports of key commodities contributed to this trend.

Among major import items, petroleum crude imports increased by 6.6 percent, while palm oil imports rose by 21.5 percent. At the same time, imports of petroleum products declined by 6.2 percent.

Despite the widening trade deficit, the February current account surplus reflects stronger inflows and relatively controlled import dynamics during the month.

The data shows that while structural pressures remain in the external sector, particularly due to stagnant exports and rising imports, strong remittance inflows continue to play a stabilizing role.

Overall, the external account remained manageable during Jul-Feb FY2026, with the February surplus highlighting an improvement in monthly performance within a broader context of mixed trade trends.

Credit: INP-WealthPk