Pakistan’s merchandise trade deficit reached $14.6 billion in the first four months of FY27, up 16 percent on the same period last year. Imports of $26 billion outran exports of $11.4 billion, and the gap widened by roughly $2 billion.
The more telling number is inside October. Exports grew 2.8 percent year on year that month, against 10.84 percent across the first quarter. Export growth has not stalled — it has decelerated sharply.
Four months, and the month that changed the trend
- Four-month deficit: $14.6 billion, up 16 percent
- Imports: $26 billion, up $2.9 billion or 12.5 percent
- Exports: $11.4 billion, up $890 million or 8.5 percent
- October deficit: $3.9 billion, up 19.7 percent year on year
- October exports: $2.9 billion, up 2.8 percent; imports $6.8 billion, up 11.8 percent
Stripping the first quarter out of the four-month totals isolates October precisely: about $2.97 billion of exports against $6.78 billion of imports, for a monthly gap near $3.8 billion. Exports were flat on September.
A quarter at 10.84 percent export growth followed by a month at 2.8 percent is the sequence that matters. One month is not a trend, but it is the month in which cement exports from northern mills went to zero and pharmaceutical exports continued falling — both traceable to the same closed border.
Related: Northern cement exports fell to zero — not low, zero
The government said so itself
Minister of State for Finance Bilal Kayani acknowledged to a parliamentary committee that closing the Afghanistan border will affect exports, while maintaining that it was required on security grounds. MNA Mirza Ikhtiar Baig noted that China is now the only open land route, and the National Assembly Standing Committee on Finance expressed concern about the closure of three international borders.
That is an unusually direct acknowledgement, and it should change how the export figures are read. A sector-by-sector search for competitiveness failures will keep finding the same cause.
It also sets the boundary of what trade policy can fix. Tariff adjustments, export financing and facilitation schemes do not reopen a land border, and the security judgement behind the closure is not a commerce ministry decision.
Two projections that do not agree
Annualising four months of imports gives $78 billion. The State Bank projects $71 billion for FY27, driven by higher energy costs.
That is a $7 billion gap between the run rate and the forecast, and it requires imports to slow materially over the remaining eight months. The central bank may be right — Brent fell to about $98.5 a barrel at the end of last week from a weekly average above $115, and a sustained oil retreat would do most of the work.
On exports the arithmetic is kinder. Four months annualised gives $34.2 billion against a government target of $34 billion, so the target is being met on current pace. The longer ambition is the problem: reaching $60 billion by 2029 from $34 billion requires about 21 percent compound annual growth for three consecutive years, against the 8.5 percent delivered so far this year.
The financing side is where this bites
Finance Secretary Imdadullah Bosal told a parliamentary committee that external debt repayments are estimated at $21.5 billion, with the government seeking $10.5 billion in rollovers. Saudi Arabia granted a $3 billion rollover last month.
A widening trade gap and a rollover requirement of that size are the same problem viewed from two ends. Reserves stood at $21.56 billion at the end of last week, which is roughly three months of import cover at the current run rate — adequate, and not a buffer that absorbs surprises.
The rupee was steady at Rs276.66 to the dollar, which is the market’s view that none of this is yet acute.
Liberalisation has not done what was promised
Pakistan has spent this fiscal year cutting tariffs on the argument that cheaper imported inputs make exporters competitive. The Auto Policy takes customs duty on cars to 15 percent by 2031; duty reductions of 20 to 25 percent on new vehicles were in the 2026-27 budget; the broader trade liberalisation programme was backed by the Ministry of Commerce, the World Bank and the IMF.
Four months in, imports are up 12.5 percent and exports up 8.5 percent. The first half of the mechanism is working exactly as designed; the second half has not followed.
Four months is too short to judge a policy whose benefits were always expected to arrive with a lag, and the border closure has muddied the evidence considerably. But the lag argument has to produce something eventually, and the honest position is that the import response arrived immediately while the export response has not yet appeared at all.
Who the support goes to
Rs88 billion of subsidies for cheaper loans was retained in the budget, directed mostly at large exporters. The Prime Minister has separately begun focusing on SME financing, without visible results so far.
The allocation is worth stating plainly because it reflects a choice. Concentrating export support on established large firms is defensible on the grounds that they can scale fastest; it also means the firms receiving subsidised credit are the ones that already had access to credit.
Planning Minister Ahsan Iqbal has said reaching $60 billion in exports is what would let Pakistan avoid future IMF programmes, and the Prime Minister has promised the current one will be the last. Both statements rest on an export trajectory that October has just made harder to believe in.
