Pakistan’s current account reverted to a surplus of $459 million in May, bringing the cumulative balance back into surplus at $255 million in the first 11 months of FY26, a marked decrease from the $1.6 billion recorded in the corresponding period last year.
The uptick is largely attributed to a sharp increase in remittances, which hit a high of $4.3 billion, according to the Pakistan Bureau of Statistics (PBS). Data issued by the PBS said the goods trade deficit had narrowed to $2.8 billion in May against $4.3 billion in April, reflected a sharp decline in imports of 19% month-on-month.
Meanwhile, petroleum imports fell 37% month-on-month to $1.43 billion while non-energy imports also softened, barring textiles. On the exports side, momentum improved, led by an 11% month-on-month boost to textiles, resulting in overall exports increasing 9% month-on-month to $2.7 billion.
Remittances surged to a record $4.3 billion last month, a 20% increase month-on-month, likely supported by Eid-related inflows. On a cumulative basis, remittances increased 9% year-on-year to $38.1 billion during the first 11 months of the outgoing fiscal year, providing a critical buffer against structural trade deficits.
Foreign exchange reserves, according to the State Bank of Pakistan, rose 8% month-on-month to $17.2 billion, supported by improving external liquidity.
Oil relief
“We continue to expect the current account to remain broadly within the SBP’s 0–1% of GDP,” said an analyst. They noted the recent decline in oil prices following easing U.S.–Iran tensions has provided meaningful support to both inflation and external account expectations.
If sustained, lower energy prices should help contain import growth and moderate CPI pressures. In addition, recent measures aimed at supporting exporters, including the abolition of the export surcharge and duty-free machinery imports, could provide a gradual boost to export competitiveness.
While remittances are expected to remain a key pillar of external stability, renewed geopolitical tensions, particularly involving Israel and Lebanon, remain a key upside risk to oil prices and the external account outlook.