LowIV Macro Policy & Sovereign Debt2 October 2026, Friday
Pakistan's trade deficit widens 15% in the first quarter
Pakistan's trade deficit rose 15.13% to $10.79 billion in July–September, according to the Pakistan Bureau of Statistics. Exports rose 10.84% to $8.42 billion, while imports climbed 13.21% to $19.22 billion.
According to The Nation, the deficit stood at $9.37 billion in the same period a year earlier. In September, exports rose 17.6% year on year to $2.94 billion and imports 11% to $6.49 billion. The monthly deficit rose 6% to $3.56 billion. 24 News HD put the monthly deficit at $3.55 billion; the difference may be due to rounding. Month on month, exports rose 16% from August and imports 11.5%.
According to Dawn, exporters complain of 3 problems: high production costs, the tax burden and delayed refunds. The paper says the conflict in the Middle East has been pushing up freight costs since February, and exports to Afghanistan have been suspended since October 2025. The Sensitive Price Indicator (SPI), released the same week, showed annual inflation of 11.53% for the week ending 1 October.
According to Dawn, LPG prices in the same index were up 66.59% on the year and electricity 58.59%. Imports growing 2.37 points faster than exports points to continued pressure on the current account.
Talay assessment
Bottom line
The 17.6% jump in September exports looks good in the headline; the real signal is that imports outgrew exports across the quarter. As energy and freight costs stay high, the deficit will keep widening. With IMF talks under way, the picture suggests Pakistan will continue to feel pressure on reserves and the currency.
Likely effects
- Pakistani rupee and reservesNegative1–6 months
A quarterly deficit of $10.79 billion puts pressure on reserves and the currency to finance imports.
- IMF talksNegativeWeeks
A deficit that widened 15% in the quarter narrows Pakistan's bargaining room in its ongoing talks with the IMF.
- Türkiye–Pakistan tradeUncertain1–6 months
As Pakistan's import demand persists, the market holds up for Turkish exporters, but FX constraints could lengthen payment terms.
Possibilities, ranked
- 1Deficit stays high55%
The monthly deficit remains above $3 billion in the October–November data.
Watch: The Pakistan Bureau of Statistics' October trade data
- 2Exports narrow the gap30%
September's export momentum continues and the monthly deficit falls below $3 billion.
Watch: Exports rising more than 15% on the year in October
- 3Return to import curbs15%
Reserve pressure pushes the central bank to impose administrative curbs on imports.
Watch: A State Bank of Pakistan announcement restricting letters of credit or import payments
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Quarterly trade deficit▼ $10.79bn
- Quarterly import growth▼ 13.21%
- September export growth▲ 17.6%