In a rare economic turnaround, Pakistan recorded a $1.9 billion current account surplus during July-April FY2025. This marks a sharp contrast to the $1.3 billion deficit in the same period last year. The Ministry of Finance described this as a “historic achievement”, last seen only in 2003 when the surplus hit $4.1 billion. Finance Minister Muhammad Aurangzeb credited the improvement to strong export performance, record-breaking remittances, and a surge in IT services exports.
The remittances sector played a key role, reaching a historic high of $4.1 billion in March alone. Overall, remittances rose by 31% to $31.2 billion during the period, supported by structural reforms and initiatives like the Roshan Digital Account, which saw 814,000 new accounts opened. Despite these gains, the trade deficit in goods expanded to $21.3 billion, mainly due to an 11.8% increase in imports. The services trade gap also widened slightly as import growth outpaced exports.
Meanwhile, the financial account saw a net outflow of $1.6 billion, compared to a net inflow of $4.2 billion last year. This shift resulted from larger debt repayments and a drop in new external borrowing. Foreign Direct Investment (FDI) dipped by 2.7% to $1.785 billion, impacted by global economic uncertainty, geopolitical tensions, and a slowdown in China’s investments. However, the foreign reserves climbed to $16.64 billion, helping stabilize the rupee at an average exchange rate of Rs278.72 per dollar.
In a broader trade context, Pakistan may benefit from US tariff changes under the Trump administration. While the US has imposed an additional 30% tariff on Pakistan, the country still faces lower tariffs than competitors like China, Vietnam, and Bangladesh. With its low import duties on US goods (7.3%) and strong textile ties, Pakistan could maintain stable trade relations and even improve market access, according to the Economic Survey 2024-25.
Looking ahead, Pakistan aims to boost raw cotton imports from the US—already valued at over $700 million in FY24—to support its value-added textile exports. This two-way trade model is seen as a strategic advantage, potentially positioning Pakistan as a preferred textile supplier. Policymakers are now working with the private sector to enhance cotton trade and leverage tariff advantages for long-term export growth.