According to the Trade Development Authority of Pakistan, merchandise exports fell 5.97 per cent to $30.13 billion in FY2025–26, while imports rose 7.89 per cent to $69.60 billion. Consequently, the merchandise trade deficit widened by 21.57 per cent to $39.47 billion.
In July 2026, exports increased by 10.4 per cent year-on-year to $2.96 billion, but imports grew even faster -- rising by 18.9 per cent to $6.94 billion, compared with $5.84 billion in July 2025.
Finance Division data show that combined goods-and-services exports remained almost unchanged at approximately $40.9 billion between FY2024-25 and FY2025-26. Services exports rose by 18.7 per cent to $10 billion, while IT exports increased by 20.6 per cent to a record $4.6 billion. Pakistan’s most dynamic export segment is therefore digital services rather than traditional merchandise.
The country’s merchandise export basket remains dangerously narrow. Textile and leather exports amounted to $18.98 billion, approximately 63 per cent of total merchandise exports, but recorded almost no growth. Agricultural and food exports declined by 25 per cent, falling from $7.487 billion to $5.58 billion, principally because rice exports dropped by 33 per cent, from $3.281 billion to $2.19 billion. Bedlinen exports remained stagnant at $4.41 billion, while sports-equipment exports increased by 13 per cent, from $322 million to $365 million. Bovine meat exports rose by 12 per cent, from $361 million to $405 million, and cotton-yarn exports increased by 14 per cent, from $656 million to $750 million.
These figures show that Pakistan can grow when producers enter expanding markets, but such successes remain too limited to transform the country’s overall export performance.
According to the World Bank, the country’s goods-and-services exports fell from an average of 16 per cent of GDP during the 1990s to only 10.4 per cent in 2024. The World Bank estimates that Pakistan has almost $60 billion in unrealised export potential. Between 2005 and 2024, Pakistan added only 22 textile export markets with annual sales of at least $1 million, while India added more than twice as many from a comparable starting position.
Textiles should shift towards technical fabrics and branded apparel; agriculture towards processed and traceable food; industries towards automation and local brands; and digital services towards high-value software and fintech
Pakistan’s average tariff, including additional and regulatory duties, approached 20 per cent. World Bank analysis indicates that a 1 per cent increase in tariff protection on upstream inputs is associated with a 0.6 per cent decline in downstream industry productivity. The National Tariff Policy proposes reducing the simple average tariff from 20.2 per cent to 9.7 per cent by 2030. Energy costs, limited financing, and inefficient logistics further disadvantage Pakistani exporters. Around 13 per cent of exporters identify energy as their single largest constraint. In 2024, government borrowing absorbed nearly 80 per cent of formal financial-sector credit, leaving private-sector credit equivalent to only 11.4 per cent of GDP. In 2023, fewer than 10 per cent of registered exporters had access to formal trade finance.
Lengthy customs procedures and costly international compliance requirements also restrict export growth. Customs clearance and trade-compliance procedures reportedly take nearly twice as long in Pakistan as they do in upper-middle-income economies. International evidence indicates that every additional day of export delay reduces trade by at least one per cent. Nearly half of Pakistani exporters also report difficulty meeting international testing and certification requirements. For example, initial compliance with the European Union’s Medical Device Regulation can cost a surgical-instrument manufacturer more than €200,000.
The experiences of competing countries demonstrate that workable solutions are available. Bangladesh’s garment industry generates approximately 82 per cent of the country’s exports, but its Export Readiness Fund has also supported 570 firms outside the garment sector. The programme helped these firms obtain 260 international certifications, enter 22 new national markets and contribute to the creation of nearly 180,000 jobs. Vietnam offers another important example of successful integration into global markets. Foreign-owned firms generate approximately 73 per cent of Vietnam’s exports, while its trade agreements provide access to markets representing almost 90 per cent of global GDP. Pakistan, by comparison, has only about 10 trade agreements, most of which remain limited in scope.
The government should reduce tariffs, provide reliable, competitively priced electricity, automate tax refunds and customs clearance, expand EXIM Bank guarantees for SMEs and establish an independent export-compliance fund. Textiles should shift towards technical fabrics and branded apparel; agriculture towards processed and traceable food; industries towards automation and local brands; and digital services towards high-value software and fintech. These measures could help raise combined exports from $40.9 billion to $60–65 billion by FY2030, requiring annual growth of 10–12 per cent and transparent quarterly monitoring.
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