PAKISTAN remains one of the least regionally integrated economies in Asia. The trade figures for the last fiscal year underline the extent of this disconnect. More than two-thirds of Pakistan’s $3.9bn in exports to nine regional countries went to China, even though total regional shipments declined by 11pc from a year earlier. Less than a third of these exports reached all the other neighbouring and regional markets combined. The imbalance is even more pronounced on the import side: of the nearly $20bn Pakistan imported from the region, almost 98pc originated in China. This lopsided trade relationship highlights not only Pakistan’s failure to diversify its regional export markets but also the limited economic integration it has achieved with the countries in its immediate neighbourhood. Shipments to Afghanistan, the second largest regional market for Pakistani exports after China, also declined, as bilateral trade has remained suspended since October. Islamabad’s decision to shut down trade has imposed a direct cost on Pakistani exporters who have lost an important neighbouring market. Unfortunately, Pakistan may be the only country in the region that is swimming against the global tide of regional integration and cooperation for economic and export growth. This situation is a reflection of the country’s failure to fully exploit its geographical location and integrate with regional supply chains.

The government needs to rethink its regional trade policy. Pakistan cannot aspire to sustained industrial growth so long as it remains economically isolated from its neighbourhood. Policymakers here must give priority to expanding market access, resolve trade barriers, improve cross-border connectivity, and build export capacity in key sectors. Regional trade must be treated as an instrument of industrial policy, not as a political issue. The need for such a shift is underscored by the country’s persistent dependence on remittances to finance its imports while exports are plunging. This is not a sustainable economic model. Sustainable external stability depends on Pakistan’s ability to earn more foreign exchange through exports. This is precisely where greater regional economic integration can make a difference. Neighbouring markets offer a relatively accessible and potentially vast outlet for manufactured goods, farm products, pharmaceuticals and services. We should take advantage of this potential, and not squander the opportunity.

Published in Dawn, July 23rd, 2026