Pakistan posts $328m current account deficit in July

August 18, 2026 (MLN): Pakistan’s current account posted a deficit of $328 million in July 2026, marking a sharp deterioration from the $814 million deficit recorded in June, according to the latest balance of payments data released by the State Bank of Pakistan (SBP).

The current account deficit stood at $384 million when excluding official transfers, indicating that official inflows provided some support to the external account during the month.

The July reading comes after Pakistan’s current account recorded a $500 million surplus in May 2026, before swinging into a $814 million deficit in June. On a quarterly basis, the current account recorded a $590 million deficit in April-June FY26, while the full FY26 balance was a $304 million deficit.

Goods trade deficit widens

The deterioration in the current account during July was primarily reflected in the country’s merchandise trade position.

Pakistan’s goods exports rose to $3.01 billion in July, compared with $2.75 billion in the previous corresponding period, while goods imports increased to $6.15 billion from $5.43 billion. This resulted in a goods trade deficit of $3.15 billion during the month, compared with $2.68 billion in the corresponding period.

The latest data shows that imports continued to grow faster than exports. According to the SBP’s memorandum indicators, goods exports increased 9.4% year-on-year in July, while imports rose 13.4%.

The faster growth in imports therefore added to pressure on the external account at the beginning of FY27.

Services deficit also contributes

The services account remained in deficit during July, with services exports recorded at $927 million against imports of $1.16 billion.

As a result, Pakistan posted a services trade deficit of $228 million in July.

Combining the goods and services accounts, the overall trade deficit in goods and services widened to $3.37 billion during July.

Primary income remains a major drag

The primary income account also remained substantially negative.

Pakistan recorded primary income credits of $81 million against debits of $929 million, resulting in a primary income deficit of $848 million in July.

The combined deficit on goods, services and primary income reached $4.22 billion during the month.

This sizeable deficit was partly offset by strong inflows under secondary income.

Remittances provide key support

Pakistan’s secondary income account remained a major source of support for the external account, recording a net surplus of $3.89 billion in July.

Within this account, workers’ remittances amounted to $3.63 billion during July, while other current transfers contributed an additional $252 million.

Despite these sizeable inflows, the surplus in secondary income was not sufficient to fully offset the combined deficit from trade in goods and services and primary income, resulting in the overall $328 million current account deficit.

Financial account records $1.14 billion inflow

Meanwhile, Pakistan’s financial account recorded a net inflow of $1.14 billion in July, reversing a deficit of $345 million recorded during the April-June quarter of FY26.

Direct investment in Pakistan amounted to $179 million during July, while portfolio investment in Pakistan recorded a net inflow of $26 million.

The largest contribution came from other investment, which recorded a net inflow of $1.34 billion during the month.

Within other investment, net incurrence of liabilities stood at a negative $1.55 billion, while the net acquisition of financial assets was negative $213 million.

Reserve position improves

Despite the current account deficit, Pakistan’s overall balance of payments remained in surplus during July.

The country recorded an overall balance of $1.39 billion, while reserves and related items showed an equivalent movement. Reserve assets declined by $1.39 billion during the month according to the balance-of-payments presentation.

The SBP’s gross reserves, including cash foreign currency holdings and excluding unsettled claims on the Reserve Bank of India, stood at $18.34 billion in July, compared with $15.65 billion in the corresponding FY26 period shown in the table.

SBP reserves excluding CRR/SCRR stood at $17.15 billion, while commercial banks’ reserves net of CRR/SCRR were recorded at $971 million.

External account faces renewed pressure at start of FY27

The July data indicates that Pakistan’s external account entered FY27 under renewed pressure from the trade side, as the increase in imports outpaced export growth.

The $3.15 billion goods trade deficit, combined with a $228 million services deficit and an $848 million primary income deficit, generated a substantial external financing requirement. Strong workers’ remittances of $3.63 billion provided an important cushion but were insufficient to prevent the current account from moving into deficit.

The latest figures will therefore keep the trajectory of imports, exports and remittances in focus, particularly as the pace of import growth remains above that of merchandise exports.

The SBP notes that the merchandise trade figures used for balance-of-payments compilation are based on exchange records and may differ from figures compiled using customs records.

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