Trade Deficit
The State Bank of Pakistan (SBP) released its latest trade data on Wednesday, revealing significant developments in the country’s trade balance for May 2025.
According to the report, Pakistan’s trade deficit saw a substantial decline of 23 percent, narrowing down to $2.6 billion in May alone. This improvement in the trade deficit was primarily driven by a notable increase in exports coupled with a reduction in imports during the month.
The data showed that exports grew by an impressive 17 percent in May 2025, reaching a total value of $2.6 billion. This rise in exports indicates a positive trend for Pakistan’s trade sector, reflecting increased demand for the country’s goods in international markets.
Various factors, including better production capacities, improved market access, and favorable global conditions, may have contributed to this export growth.
On the other hand, imports in May decreased by 8 percent, amounting to $5.2 billion. The reduction in imports helped ease the pressure on the trade deficit, as fewer goods and services were brought into the country compared to previous months.
This decline in import value could be attributed to tighter import regulations, currency considerations, or efforts to curb non-essential imports as part of broader economic measures.
As a combined effect of rising exports and falling imports, the trade deficit—the gap between the value of imports and exports—contracted by 23 percent to $2.6 billion in May 2025. This narrowing of the trade deficit is a welcome development for Pakistan’s economy, signaling improved external sector dynamics.
However, when looking at the cumulative figures for the first 11 months of the current financial year (July 2024 to May 2025), the situation appears more complex.
During this period, Pakistan’s cumulative trade deficit actually increased by 11 percent, reaching $24 billion. This indicates that despite the encouraging progress in May, the overall trade deficit for the year so far remains elevated, reflecting ongoing challenges in balancing imports and exports over the longer term.
The SBP’s monthly trade data highlights both the positive momentum in export growth and the continuing need for sustained efforts to manage imports and improve the country’s trade balance for the remainder of the financial year.
