Pakistan Trade Deficit with Neighbouring Countries Widens by $11.17B

The Pakistan trade deficit with neighbouring countries widened by 32.82% to $11.17 billion during the first 11 months of the current fiscal year (FY25), compared to $8.41 billion in the same period last year, according to official figures released by the State Bank of Pakistan.

Despite modest export growth to Afghanistan, Bangladesh, and Sri Lanka, the overall trade imbalance expanded due to a sharp rise in imports, particularly from China, India, and Bangladesh. This trend has sparked fresh concerns among policymakers over the country’s growing reliance on regional imports.

A closer look reveals that Pakistan’s exports to the nine neighbouring countries rose marginally by 0.98% to $4.085 billion during July–May FY25, up from $4.045 billion in the same period last year. In contrast, imports surged 22.52% to $15.255 billion from $12.451 billion, deepening the Pakistan trade deficit with neighbouring countries.

China Remains Key Driver of the Trade Gap

China remains Pakistan’s largest trading partner in the region. Imports from China soared by 22.59% to $14.89 billion in 11MFY25, compared to $12.146 billion last year. In FY24, imports from China had already risen nearly 40% to $13.506 billion. However, exports to China declined by 11.18%, falling to $2.27 billion from $2.556 billion—widening the bilateral trade gap.

Trade with India also saw a similar pattern. Imports rose by 11.82% to $211.42 million during the review period, while exports dropped significantly to just $0.51 million from $3.43 million a year earlier.

On a positive note, Pakistan’s exports to Afghanistan rose sharply by 41.39% to $723.44 million, driven largely by sugar shipments, which exceeded 700,000 tonnes in the past four months. Imports from Afghanistan also climbed 142% to $24.72 million from $10.18 million.

Exports to Bangladesh grew 21.45% to $728.31 million amid improving political stability and renewed rice exports. Imports from Bangladesh also increased 41.95% to $73.55 million.

In contrast, exports to Sri Lanka dipped slightly by 3.02% to $352.37 million, attributed to ongoing economic challenges in the island nation. Imports remained steady at $54 million.

Overall, Pakistan’s regional trade gap continues to widen, with policymakers closely monitoring the imbalance—especially the underperformance in exports to key partners like China—while seeking opportunities to boost regional trade through improved bilateral and multilateral agreements.