Overview
- The current account returned to deficit in FY26 with a marginal annual shortfall of about USD 139 million and a monthly deficit of USD 649 million in June, driven by lower remittances and rising imports.
- Worker remittances grew about 9 percent year on year to roughly USD 41–41.6 billion and helped offset trade losses, but remittances fell sharply month on month in June and are concentrated in GCC countries that face regional war risks.
- Merchandise exports fell nearly 6 percent to about USD 30.1 billion in FY26 while imports rose to roughly USD 69.6–69.7 billion, widening the goods trade deficit toward USD 39.5 billion and leaving the trade gap near a four-year high.
- Policy choices are constrained by a high real effective exchange rate of 106.5 that weakens export competitiveness, modest reserves near USD 17.2 billion, and recent fiscal reliefs for exporters that may not fix underlying competitiveness problems.
- If remittances slip further or oil prices rise, the State Bank of Pakistan may reintroduce tighter limits on non-essential imports, which could slow growth, raise consumer prices, and deepen pressure on manufacturing and agricultural exporters.