Pakistan’s trade deficit with Middle Eastern countries expanded significantly during the first five months of fiscal year 2025-26. The gap grew by 7.88 per cent due to rising imports and falling exports to the region. Policymakers have expressed concern, especially as energy-related imports continue to dominate trade flows.
According to data compiled by the State Bank of Pakistan, the trade deficit reached $5.948 billion during July–November FY26. In comparison, the deficit stood at $5.514bn during the same period last year. This widening gap highlights growing pressure on Pakistan’s external account.
Rising Oil Imports Drive Trade Imbalance
The increase in the trade deficit largely stems from higher imports from the Middle East. In particular, petroleum imports rose sharply during the review period. Imports from the region increased by 4.39pc to $7.166bn in the first five months of FY26. Last year, imports during the same period totaled $6.864bn.
Moreover, imports surged by 5.64pc to $17.081bn in FY25, compared to $16.169bn in the preceding year. The United Arab Emirates remained Pakistan’s largest import partner in the region. Saudi Arabia followed closely, while other Gulf countries also contributed to the higher import bill.
Meanwhile, energy dependence continues to shape Pakistan’s trade profile. Rising global oil prices and higher consumption pushed import values upward. As a result, the overall trade gap expanded despite government efforts to manage external balances.
Exports to Gulf Countries Continue to Decline
At the same time, Pakistan’s exports to the Middle East declined notably. During July–November FY26, exports fell by 9.85pc to $1.217bn from $1.350bn in the same months last year. In FY25, exports also dropped by 1.52pc to $3.107bn.
Exports to Saudi Arabia decreased by 10.41pc to $272.232m. Previously, they stood at $303.858m. Imports from the kingdom, however, increased by 6.66pc to $1.596bn. This imbalance further widened bilateral trade gaps.
Similarly, exports to the UAE fell by 9.99pc to $833.365m. Last year, exports during the same period reached $925.940m. Pakistan mainly exports rice, bovine carcasses, cotton garments, guavas, and mangoes to the UAE. Despite this product range, demand weakened during the period. In contrast, imports from the UAE rose by 13.85pc to $3.675bn.
Mixed Trends Across Smaller Gulf Markets
Trade figures with other Gulf states showed mixed results. Exports to Bahrain declined by 10.44pc to $20.243m. Meanwhile, imports from Bahrain increased sharply by 22.20pc to $91.662m.
Exports to Qatar also fell by 16.24pc to $42.337m. However, imports from Qatar declined by 8.15pc to $1.259bn, offering slight relief. Exports to Kuwait rose marginally by 3.47pc to $49.308m. At the same time, imports from Kuwait increased by 21.61pc to $543.403m.
Pakistan has recently signed a free trade agreement with Gulf Cooperation Council states. Authorities hope the agreement will help reduce trade imbalances. However, current figures suggest that export recovery remains a key challenge.
