ISLAMABAD: Pakistan’s merchandise exports slipped back into negative territory in August, fuelling concerns among policymakers over weakening international demand and the country’s eroding competitiveness in global markets.

This marks the fourth contraction in the last five months, with July offering only a brief respite through marginal growth. The persistent decline reflects mounting pressure on the country’s trade performance as exporters face subdued external demand and a high cost of doing business.

According to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday, exports fell by 12.49pc year-on-year to $2.42 billion in August, down from $2.76bn in the same month last year. On a month-on-month basis, export proceeds declined by 9.98pc.

During the first two months of the current fiscal year (July-August FY26), exports edged up by a marginal 0.65pc to $5.11bn, compared to $5.07bn in the same period of the previous year. The export growth of 16.91pc recorded in July was not enough to offset the broader trend of stagnation and decline.

The weakness in export performance was evident in previous months as well, with declines of 0.59pc in June, 10.07pc in May, and 7.36pc in April. Although March recorded a modest growth of 3.08pc, the trend reverted to negative in subsequent months.

In FY25, total exports stood at $32.11bn, reflecting a 4.67pc increase from $30.68bn in the previous fiscal year. However, the growth momentum weakened sharply after October, with several months registering negative or single-digit gains.

Despite the overall slump, global buyers have recently shifted apparel sourcing away from Bangladesh and China, opening up an opportunity for Pakistani exporters to capture market share. However, this potential remains underutilised due to structural challenges at home.

Trade deficit widens

Meanwhile, imports rose 6.42pc year-on-year to $5.28bn in August, up from $4.96bn in the same month last year. On a monthly basis, however, imports fell by 9.35pc.

In the first two months of FY26, the import bill increased by 14.23pc to $11.2bn from $9.73bn a year earlier. For the full FY25, imports rose 6.57pc to $58.38bn, compared to $54.78bn in the previous fiscal year.

As a result of declining exports and rising imports, the trade deficit widened significantly. In August, the deficit rose by 30.13pc to $2.86bn, compared to $2.21bn in the same month last year. Cumulatively, the deficit for July-August stood at $6.02bn, up from $4.66bn in the corresponding period last year.

For FY25, the annual trade deficit expanded by 9pc to $26.27bn, from $24.11bn a year earlier, raising concerns about the sustainability of external accounts in the face of fragile export growth and a rising import bill.

Published in Dawn, September 3rd, 2025