Pakistan’s Current Account Deficit Widens 16% To $874m In Q1 FY27
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✧ GENERATE BRIEFING
Pakistan’s external account deficit expanded by 15.8% year-on-year to reach $874 million during the first quarter of fiscal year 2026–27 (July–September 2026), up from $755 million in 1QFY26. Data released by the State Bank of Pakistan (SBP) confirms that a widening trade deficit driven by double-digit import acceleration outpaced solid growth in export earnings and workers' remittances. Key macroeconomic metrics, trade aggregates, and SBP balance-of-payments projections for 1QFY27 include: Goods Trade Gap Disparity: Total goods imports expanded by 14.3% YoY to $17.78 billion, while total goods exports grew at a slower 7.7% YoY pace to $8.45 billion, causing the 1QFY27 merchandise trade deficit to widen by 21.1% YoY to $9.33 billion. Combined goods and services deficit expanded to $10.16 billion. Remittance Inflow Buffer: Remittances provided essential secondary income support, totaling $10.88 billion during 1QFY27 a 14.0% YoY increase compared to $9.54 billion received in 1QFY26.
Pakistan’s current account deficit increased 16% year-on-year to $874 million in the first quarter of FY2026-27, compared with $755 million in the same period last year, as rising imports outpaced export growth.
Data released by the State Bank of Pakistan (SBP) showed that the deficit widened by $119 million during July–September, reflecting growing pressure on the country’s external account as domestic demand and import payments increased.
Import Acceleration Expands Goods Trade Gap
In September, the current account recorded a deficit of $356 million, compared with a surplus of $133 million in September 2025. The monthly deficit also rose sharply from $73 million in August 2026.
Pakistan’s total goods imports rose to approximately $17.78 billion in the first quarter, from $15.56 billion a year earlier. The increase was driven by stronger demand for imported industrial inputs and capital equipment amid the ongoing economic recovery, expanding the total goods trade deficit to $9.33 billion.
Remittances Provide Support Against External Pressures
Exports provided some support but were insufficient to offset the higher import bill. The country’s combined goods and services exports reached $3.95 billion in September, up from $3.42 billion a year earlier. However, imports of goods and services climbed to $7.38 billion from $5.99 billion over the same period.
Workers’ remittances continued to support external inflows. Pakistan received $10.88 billion in remittances during the first quarter, an increase of 14% year-on-year, helping finance part of the widening current account deficit.
SBP Balance-of-Payments Outlook and Target Metrics
The SBP expects resilient remittances and higher information and communication technology (ICT) exports to help contain the current account deficit within 0–1% of GDP by the end of FY2026-27. The outlook, however, remains exposed to import growth, energy prices and developments in the global economy.
The latest figures highlight the challenge of sustaining economic recovery while keeping external payments manageable. If imports continue to grow faster than exports, Pakistan could face additional pressure on its balance of payments despite strong remittance inflows.
