Key Points
- Trade deficit contracts 39 per cent in May 2026
- Exports rise 10 per cent after improved manufacturing performance
- Imports fall 22 per cent due to lower demand and policy controls
- Foreign exchange and reserve outlook improves modestly
ISLAMABAD: Pakistan recorded a significant narrowing of its trade deficit in May 2026, with exports posting steady growth and imports declining sharply, indicating improved external account dynamics.
Official data indicated that the trade deficit contracted by 39 per cent during the month under review.
Exports increased by 10 per cent compared to the previous month, supported by improved performance in key manufacturing and textile categories. Gradual diversification in select export segments also improved export momentum.
Imports declined by 22 per cent, reflecting lower demand for certain input goods, and continued policy efforts to manage external pressure.
The combined movement in exports and imports resulted in a notable reduction in the overall trade gap, easing pressure on foreign exchange reserves and external financing needs.
Economic officials linked the process of stabilising external indicators to overall macroeconomic adjustments in recent months.
Analysts note that the improvement in the trade balance reflects both demand compression due to import management measures and a gradual recovery in export competitiveness.
However, they caution that sustaining export growth will require continued policy support and industrial stability.
The trend is expected to remain under close observation in the coming months as policymakers assess its impact on growth, inflation, and external financing requirements.
