Massive Trade Imbalance: Pakistan Bleeds $11.7B to Middle East in FY25

ISLAMABAD: Pakistan’s economic relationship with the Middle East is increasingly marked by an imbalance in trade, as the deficit ballooned to $11.731 billion during the first ten months of the current fiscal year (July–April FY25), reflecting a 9.89% increase compared to $10.675 billion in the same period of the previous year.

At the heart of this widening gap lies a surge in energy imports, particularly petroleum. Data from the State Bank of Pakistan shows that crude oil imports grew by 14.9%, pushing overall imports from the region higher, while exports struggled to keep pace. This surge in petroleum consumption is reversing the gains made in FY24, when the trade deficit with the Middle East had actually narrowed by 20.47%, thanks to reduced consumption driven by local price hikes.

Imports Outpace Exports Once Again

During 10MFY25, imports from the Middle East rose 8.76%, reaching $14.355 billion, up from $13.198 billion a year earlier. In contrast, exports to the region increased by just 4%, reaching $2.624 billion compared to $2.523 billion previously.

This diverging trend follows FY24’s figures, where imports had declined 13.53% to $16.16 billion, while exports had shown a robust 35.23% increase, climbing to $3.155 billion from $2.33 billion.

In an effort to address the growing trade gap, Pakistan has recently entered a free trade agreement with the Gulf Cooperation Council (GCC). This move is seen as part of a broader strategy to balance imports and exports with key trading partners in the region.

Country-wise Export and Import Performance

Saudi Arabia

• Exports rose 4.49% to $605.39 million during 10MFY25.
• FY24 saw a dramatic 40.98% surge in exports, hitting $710.335 million.
• Imports from the Kingdom dropped 16.26% to $3.176 billion during the first ten months.
• In FY24, imports slightly decreased by 0.01% to $4.49 billion.

United Arab Emirates (UAE)

• Exports increased 8.67% to $1.779 billion in July–April FY25.
• FY24 data shows a 41.15% jump to $2.082 billion, driven mainly by Dubai’s demand.
• Top exports: rice, bovine carcasses, men’s and boys’ cotton ensembles, guavas, and mangoes.
• Imports from the UAE surged 30.81% to $6.614 billion.

Qatar

• Exports dropped 27.87% to $100.51 million during 10MFY25.
• Imports, however, climbed 7.83% to $2.933 billion.

Kuwait

• Exports declined 10.84% to $97.59 million.
• Imports showed a marginal dip of 1.69%, settling at $1.453 billion.

Bahrain

• Exports plunged 28.66% to $41.93 million.
• Imports increased by 18.37%, reaching $179.41 million.

While some progress has been made in improving exports, particularly to major markets like the UAE and Saudi Arabia, the pace remains insufficient to offset the heavy burden of rising oil imports. With the trade deficit crossing the $11.7 billion mark, and a heavy tilt in favour of imports, especially petroleum, Pakistan’s trade imbalance with the Middle East remains a pressing challenge for policymakers despite recent diplomatic and economic initiatives.