Pakistan’s trade deficit saw a 7.5% year-on-year (YoY) decline in March 2025, dropping to $2.119 billion, compared to $2.288 billion recorded in the same month last year, according to the Pakistan Bureau of Statistics (PBS). This improvement reflects stronger exports and a slowdown in imports, contributing to a more balanced trade performance.
Exports Show Growth Despite Economic Challenges
Pakistan’s exports in March 2025 amounted to $2.6 billion, reflecting a 1.9% YoY increase and a 5.1% month-on-month (MoM) rise. This positive trend suggests that the country is making progress in strengthening its export sector, despite ongoing economic uncertainties.
Several factors have contributed to this export growth, including:
- Government incentives for exporters
- Increased demand in international markets
- Improved production capacity in key sectors like textiles, IT services, and agriculture
Imports Decline, Helping Reduce the Trade Deficit
On the import side, Pakistan’s total imports declined to $4.7 billion, marking a 2.5% YoY decrease and a 1.1% MoM decline. The reduction in imports can be attributed to:
- Lower global commodity prices
- Government policies to curb non-essential imports
- Efforts to boost local production and self-sufficiency
While a decline in imports helps narrow the trade deficit, it also raises concerns about the availability of raw materials and capital goods for domestic industries.
9-Month Trade Deficit Increases by 4.5% Despite Monthly Improvement
Despite the positive trend in March, Pakistan’s cumulative trade deficit for the first nine months of FY25 (July-March) increased by 4.5% YoY, reaching $17.9 billion, compared to $17.14 billion in the same period last year.
- Exports for 9MFY25: $24.69 billion (up 7.7% YoY)
- Exports for 9MFY24: $22.926 billion
- Imports for 9MFY25: $42.58 billion (up 6.3% YoY)
- Imports for 9MFY24: $40.054 billion
This suggests that while exports are growing, the rise in imports has outpaced export growth, leading to a wider trade deficit over the longer term.
Key Sectors Driving Export Growth
The textile sector, which remains Pakistan’s largest export contributor, has shown steady performance, driven by government subsidies and improved energy supply to industries. Additionally, IT exports have seen robust growth, with freelancers and software companies securing higher international contracts.
Other key export contributors include:
- Agricultural products (rice, fruits, and vegetables)
- Sports goods (especially ahead of global sporting events)
- Pharmaceuticals and surgical instruments
Government Measures to Strengthen Trade Performance
To address the trade imbalance, the government has implemented several measures, including:
- Incentives for Exporters: Reduced tariffs on export-oriented industries and subsidies for raw materials.
- Import Restrictions: Limiting non-essential imports to control the outflow of foreign exchange.
- Boosting Domestic Production: Encouraging local manufacturing to reduce dependence on imports.
- Currency Management: Stabilizing the Pakistani Rupee to make exports more competitive in global markets.
Challenges Ahead
Despite the positive March 2025 trade data, Pakistan still faces several challenges, including:
- Rising global inflation impacting import costs
- Dependence on energy imports, increasing overall expenditure
- Need for further diversification of export products
Future Outlook
Experts believe that continued export growth and strategic import management will be key to stabilizing Pakistan’s economy. If the current upward trend in exports continues and imports remain controlled, the country could see a further reduction in its trade deficit in the coming months.
The government’s focus on boosting industrial output, improving trade agreements, and supporting export-oriented businesses could pave the way for sustainable economic growth. However, macroeconomic stability and global market trends will play a crucial role in shaping Pakistan’s trade future.
Pakistan’s trade deficit narrowing by 7.5% in March 2025 is a positive development, indicating improved export performance and controlled imports. However, the overall trade deficit for 9MFY25 still presents long-term challenges. With the right policy measures and continued export growth, Pakistan can strengthen its trade position and achieve a more stable economic outlook.
