Pakistan's regional trade deficit widens as imports surge, especially from China
Pakistan's trade gap with nine neighboring countries grew to $4.97 billion in the July-September quarter, driven by a sharp rise in imports, notably from China.
During the first quarter of fiscal year 2026-27, Pakistan's trade deficit with nine neighboring economies rose to $4.97 billion, a 26.62% increase over the previous year. Export volumes to the region declined, especially after trade with Afghanistan was halted in October 2025 and shipments to Bangladesh and Sri Lanka fell. Imports, however, surged, with a notable 19.76% jump in purchases from China, pushing the bilateral deficit with China up by $858.808 million and making up roughly 82.18% of the overall deficit expansion.
Exports to China grew modestly, while trade with India showed no exports and a rise in imports. The State Bank of Pakistan's data highlight the growing imbalance as regional export demand weakens and import dependence deepens.
Why it matters
The widening deficit signals mounting pressure on Pakistan's balance of payments and highlights growing reliance on Chinese imports.
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