Pakistan's current account deficit in FY26's 4 months triple that of last year

Pakistan’s current account deficit widened sharply to $733 million in the first four months of fiscal year 2025-26 (FY26), the State Bank of Pakistan said Monday, underscoring mounting pressure on the country’s external accounts.

The deficit is more than three times the $206 million recorded during the same period last year.

In October alone, Pakistan posted a current account deficit of $112 million, a reversal from a surplus of $296 million in October 2024 and a surplus of $83 million in September this year.

The central bank said exports of goods fell 9% year-on-year to $2.75 billion in October, while imports rose 13% to $5.27 billion. The resulting goods trade deficit reached $2.53 billion for the month.

Exports of services increased 18% to $826 million, and services imports climbed 13% to $1.05 billion.

Workers’ remittances offered some relief, rising 12% to $3.42 billion in October. Secondary income, which includes remittances, improved 14% to $3.55 billion.

Despite stronger inflows from overseas Pakistanis, the current account position deteriorated as the widening trade gap and higher imports continued to weigh on the country’s external finances.

Waqas Ghani, director research at JS Global, said that Pakistan’s external account showed mixed signals in October, with the country posting a $112 million current account deficit after a brief surplus in September. The deterioration was driven primarily by a 4% month-on-month widening in the trade deficit, as imports rose faster than exports amid recovering domestic demand.

He added that remittances have played a pivotal role in stabilizing Pakistan’s external account, consistently offsetting the trade deficit. Their role has become even more important as external pressures resurface.