KARACHI: The current account posted a deficit of more than $874 million in the first quarter of the current fiscal year, mainly due to a widening trade gap.
State Bank of Pakistan (SBP) data on Friday showed the current account deficit (CAD) swelled to $874m in July-September, up from $755m in the same period last year.
The deterioration was particularly pronounced in September, when the current account recorded a deficit of $356m compared to a surplus of $133m in the same month last year.
The first-quarter deficit has already exceeded the $391m CAD recorded for the entire FY26.
During July-September FY27, the country’s trade deficit increased by more than 15 per cent to $10.79bn from $9.37bn in the corresponding period last year.
Foreign direct investment increases 20pc to $719.7m in first quarter
The widening trade gap reflects not only higher international oil and gas prices but also a rising food import bill. After cotton, Pakistan has also been importing wheat, while edible oil imports remained a major burden as they reached $3.357bn in FY26.
The total food import bill stood at $8.3bn in FY26, while petroleum imports amounted to $15.5bn.
The rising import bill has increased pressure on the current account despite remittance inflows of more than $41bn in FY26.
Goods exports during July-September FY27 rose by $604m to $8.454bn from $7.853bn a year earlier. However, imports increased by more than $2.2bn to $17.784bn from $15.558bn during the same period last year.
Both exports and imports of services also increased by almost half a billion dollars during the first quarter.
The faster rise in imports relative to exports suggests that the current account deficit could widen further during FY27 unless the trade imbalance eases.
Financial experts believe the CAD could increase further if the conflict in the Gulf persists and international oil prices remain elevated.
FDI rises 20pc
Meanwhile, foreign direct investment (FDI) increased by 20pc during the first quarter of FY27 despite regional and domestic uncertainty.
SBP data showed FDI reached $719.7m during July-September FY27 compared to $600.4m in the corresponding period of last fiscal year, showing an increase of $119.3m.
While the inflow remains modest relative to the size of Pakistan’s economy, the year-on-year increase could support stronger investment flows during the remaining nine months of the fiscal year.
FDI in September alone rose to $219.5m from $185.3m in the same month last year, an increase of about $34m.
China has traditionally been Pakistan’s largest source of foreign investment, but Canada emerged as the biggest investor during the first quarter, with inflows of $229m compared to $225m a year earlier.
FDI from China increased to $197.5m from $121m during the same period last year.
Other major inflows included $83.4m from the United Kingdom, $54.8m from the United Arab Emirates and $25.6m from Hong Kong.
Published in Dawn, October 17th, 2026
