Pakistan Records $700 Million Current Account Deficit in First Eight Months of Fiscal Year

Karachi: Pakistan’s external sector is showing renewed signs of pressure, as the country posted a $700 million current account deficit during the first eight months of fiscal year 2026, highlighting weaknesses in recent economic stability.

According to the State Bank of Pakistan’s latest Balance of Payments data, from July 2025 to February 2026, the current account was in deficit, compared to a $479 million surplus during the same period last year.

However, February 2026 saw a $427 million current account surplus, a marked improvement over an $85 million deficit in February 2025 and a $68 million surplus in January 2026. Analysts noted this was the largest monthly surplus since March 2025.

The external account pressure is primarily due to trade deficits. In February, the trade deficit widened to $2.67 billion, with exports at $2.48 billion and imports reaching $5.15 billion. From July to February, the cumulative trade deficit rose to $21.08 billion, compared to $16.49 billion in the same period last year. Exports totaled $20.74 billion, down from $21.94 billion, while imports climbed to $41.82 billion.

Remittances provided a major cushion, totaling $26.49 billion during this period. Experts warn that without remittances, the current account deficit would have been significantly higher. They also note that relying mainly on remittances and external borrowing is insufficient for sustainable economic stability. Pakistan’s exports remain concentrated in low value-added sectors, particularly textiles, which face stiff regional competition.

Pressure also persisted in the primary income account, which posted a $5.64 billion deficit from July to February, largely due to profit repatriation by foreign investors and external debt repayments. Foreign direct investment in the financial account remained limited.

Economists emphasize that without fundamental reforms to diversify exports, improve industrial output, and ensure efficient energy use, Pakistan’s external account will remain vulnerable to global price fluctuations and import pressures.