Exports recorded a sharp decline of over 20 percent in December, highlighting continued stress on the country’s external sector. On a month-on-month basis, export proceeds also fell by 4.26 percent during the month. The persistent decline has extended concerns for exporters, even though policymakers have yet to formally review the reasons behind the slowdown. No high-level meeting has been convened so far to assess the falling export trend.
The negative growth in exports has continued since August of the current fiscal year. July was the only exception, when export proceeds increased by 16.43 percent year-on-year. Since then, earnings have remained under pressure. Export proceeds declined by 12.49 percent in August, followed by a 3.88 percent drop in September. October saw another fall of 4.46 percent, while November recorded a sharper decline of 14.54 percent. December marked the fifth consecutive month of contraction.
Export Earnings Under Persistent Pressure
During the first half of the fiscal year, from July to December, export proceeds posted a negative growth of 8.70 percent. Total exports stood at $15.184 billion during this period. This compares with $16.631 billion recorded in the same months last year. The decline reflects mounting challenges faced by exporters across key sectors.
The continued drop in exports underscores pressure on the country’s trade performance. Exporters are grappling with subdued global demand. Rising production costs at home have added to the burden. The high cost of doing business remains a key concern. Textile exporters, in particular, have complained about shrinking margins and order contractions. Energy costs, financing rates, and taxation issues have also affected competitiveness.
Despite the current slowdown, export proceeds had shown improvement in the previous fiscal year. In FY25, exports rose by 4.67 percent to $32.106 billion. This was higher than $30.675 billion recorded in the preceding year. However, the momentum has not carried forward into the current fiscal year. Exporters now fear prolonged weakness if structural issues remain unresolved.
Imports Rise, Trade Deficit Expands
While exports declined, imports continued to rise. According to Pakistan Bureau of Statistics data, imports grew by 2 percent to $6.022 billion in December 2025. This was up from $5.904 billion in the same month last year. On a month-on-month basis, imports increased sharply by 13.49 percent, adding pressure to the trade balance.
In the first six months of FY26, the import bill surged by 11.28 percent. Imports reached $34.388 billion during July–December, compared to $30.902 billion in the same period last year. For the full FY25, imports rose by 6.57 percent to $58.38 billion from $54.78 billion a year earlier.
The rising imports and falling exports have widened the trade deficit significantly. The deficit increased by 23.79 percent to $3.705 billion in December 2025. It was $2.993 billion in December last year. During July–December FY26, the trade deficit swelled by 34.57 percent to $19.204 billion. This compares with $14.271 billion in the corresponding period last year.
For FY25, the overall trade deficit widened by 9 percent to $26.27 billion. It stood at $24.11 billion in the previous year. Economists warn that the growing gap could strain foreign exchange reserves. Exporters are urging urgent policy support to restore competitiveness and reverse the declining trend.
