Pakistan’s trade deficit with nine neighbouring countries widened sharply in the first five months of the current fiscal year, reflecting falling exports and rising imports across the region. Official data shows the gap increased by more than 39 per cent, underlining persistent structural weaknesses in regional trade.
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According to figures compiled by the State Bank of Pakistan, the trade deficit with Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives rose to $6.22 billion during July–November FY26. This compares with $4.47bn recorded in the same period of the previous fiscal year.
The widening gap was largely driven by a 17pc decline in exports to these countries, which fell to $1.64bn in the five-month period. The drop was led by lower shipments to China and Afghanistan, with exports to Kabul plunging after Pakistan suspended all forms of trade in October.
Exports to China fell nearly 7pc year-on-year, while those to Afghanistan declined by more than 94pc. Shipments to Bangladesh and Sri Lanka also posted negative growth, while exports to India showed a marginal increase but remained negligible in absolute terms.
In contrast, imports from neighbouring states surged by over 22pc to $7.86bn in the same period. China remained Pakistan’s largest import source in the region, accounting for the overwhelming share of inbound trade, followed by India and Bangladesh at a distant level.
Imports from China alone rose nearly 23pc during the five months, highlighting Pakistan’s heavy dependence on Chinese goods. While imports from India dipped year-on-year in the period under review, they had increased on an annual basis in the previous fiscal year.
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The data underscores growing imbalances in Pakistan’s regional trade, with experts warning that declining exports and rising import reliance could further strain the external account unless corrective measures are taken. Strengthening export competitiveness and restoring formal trade channels, analysts say, will be critical to narrowing the gap.