THREE reports last Friday — a widening food trade gap, return to a current account deficit, and the government’s shift to daily fuel pricing amid renewed Gulf tensions — reveal how fragile Pakistan’s external sector remains, despite the recent macroeconomic stabilisation.
The headline current account deficit of just $139m in FY26 appears reassuring. But the composition of the external account tells an uncomfortable story: Pakistan avoided a large deficit not because it exported more, but because expats sent home $41.6bn. Without those remittances, the external account would have deteriorated sharply. Exports remained largely stagnant. Goods exports declined, while the modest increase in services exports merely offset part of the loss. Meanwhile, imports stayed elevated, producing a merchandise trade deficit exceeding $35bn.
The deterioration in agricultural trade is particularly worrying. Pakistan, an agrarian economy, saw food imports rise nearly 12pc to over $9bn while raw food exports plunged almost 30pc. Rice exports fell sharply. Vegetable exports collapsed by more than half, reflecting the disruption of trade with Afghanistan, once a major regional market. Pakistan was also forced to import unprecedented quantities of sugar after exporting the commodity only months earlier. Edible oil imports continued to rise.
