Trade deficit shrinks 39% in May

June 03, 2026 (MLN): Pakistan's trade deficit narrowed by 39.43% month-on-month (MoM) to $2.58 billion in May 2026, compared to $4.26bn in April 2026, as imports contracted sharply during the month.

The improvement was driven by a significant drop in imports alongside a moderate uptick in exports, according to provisional data released by the Pakistan Bureau of Statistics (PBS).

On a year-on-year (YoY) basis, the trade deficit shrank by 13.68% from $2.99bn recorded in May 2025, offering some relief on the external account.

Monthly Performance:

Exports in May 2026 rose to $2.71bn, registering a 9.59% MoM increase compared to $2.47bn in April 2026, continuing a positive momentum on the export front.

Imports declined sharply to $5.29bn, down 21.45% MoM from $6.73bn in April. The steep fall in imports, outpacing export growth, was the primary driver of the narrowing monthly trade gap.

As a result, the trade deficit contracted to $2.58bn during the month.

Khurram Schehzad, on his X account stated that Pakistan's trade account posted its strongest indicators in recent memory in May 2026, on the back of a 10% surge in exports and a steep 22% decline in imports.

The sharp compression in the trade gap signals a meaningful shift in the country's external account dynamics, with the economy showing tangible signs of moving toward greater sustainability and stability.

Yearly Performance:

On a YoY basis, exports grew modestly by 1.26% from $2.67bn in May 2025.

Imports also declined by 6.63% YoY from $5.66bn, and the combined effect of higher exports and lower imports resulted in the trade deficit decreasing to $2.58bn, down 13.68% from $2.99bn in the same month last year.

Cumulative Trend (July – May FY26):

During the first eleven months of FY26, total exports stood at $27.90bn, marking a 5.61% decline YoY compared to $29.56bn in the same period of FY25.

Meanwhile, cumulative imports rose 5.94% YoY to $62.66bn, up from $59.15bn last year.

Consequently, the cumulative trade deficit widened to $34.76bn, showing a 17.48% increase compared to $29.59bn in the corresponding period of FY25.

Despite the monthly improvement in the trade balance, the persistent decline in cumulative exports and rising annual imports continue to highlight structural vulnerabilities in Pakistan's external sector, sustaining pressure on the country's balance of payments position.

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