Pakistan’s trade deficit with nine neighbouring countries widened by 26.62 percent to $4.97 billion in the first quarter of the current fiscal year, July to September 2026, up from $3.93 billion in the same period last year, according to State Bank of Pakistan data reported by Dawn.
What a trade deficit means
A trade deficit simply means a country buys more from another country than it sells to it. Pakistan exported goods worth $944.24 million to the nine countries in the quarter, down 6.72 percent from about $1.01 billion a year earlier. At the same time, imports from those countries jumped 19.79 percent to $5.92 billion, up from $4.94 billion. When imports grow and exports shrink, the gap widens.
For scale, this regional trade is only a small slice of Pakistan’s total exports, which reached $11.2 billion in the same quarter across all markets. The regional picture is therefore not the whole trade story, but it shows where Pakistan’s neighbourhood trade is heading.
China accounts for most of the widening
China dominates the regional numbers. Imports from China rose 19.76 percent to $5.82 billion, while Pakistan’s exports to China grew 17.95 percent to $663.57 million. Exports grew, but from a much smaller base, so the bilateral gap with China still widened by $858.81 million. That single increase accounts for about 82.18 percent of the total increase in the deficit with all nine countries.
The other neighbours moved in different directions. Exports to Afghanistan plunged 88.34 percent to $18.86 million, from $161.76 million a year earlier, while imports from Afghanistan fell 94.40 percent to $0.25 million. Dawn notes that trade with Afghanistan, including exports, has remained suspended since 10 October 2025. Exports to Bangladesh fell 2.96 percent to $174.77 million, while imports from Bangladesh dropped 36.11 percent to $13.88 million. Imports from India rose 68.90 percent to $61.74 million, while no exports to India were recorded in the quarter.
What this means
For the ordinary reader, the regional gap matters because imports must be paid for in foreign currency, which puts pressure on reserves and, over time, on the rupee. A wider gap with neighbours does not by itself mean the economy is in trouble — Pakistan’s overall exports, remittances and reserves improved in the same quarter — but it does show a familiar weakness: Pakistan sells far less to its neighbours than it buys from them, and its biggest neighbour, China, supplies the overwhelming share of those imports.
Closing that gap will require selling more, not just buying less. That means more competitive exports to nearby markets, and fewer disruptions to cross-border trade, especially with Afghanistan and Bangladesh, where shipments fell sharply.
Sources: Dawn, Profit by Pakistan Today. Written in our own words for information only — not investment advice.