The current account surplus narrowed sharply to $49 million during March to August from $586 million a year earlier, as a widening merchandise trade deficit more than offset stronger services exports and higher workers’ remittances.
The current account balance deteriorated by $537 million during March-August 2026 compared with the same period last year, with the merchandise trade deficit widening to $18.75 billion from $15.52 billion. The figures highlight growing pressure on Pakistan’s external account following the Iran war, with higher energy and other import costs weighing on the country’s trade balance.
Goods imports rose by $3.12 billion, or about 10%, to $34.27 billion during the period, while goods exports slipped $116 million to $15.52 billion. The increase in imports was led by petroleum and related products. Petroleum imports climbed $1.34 billion to $8.55 billion, while oil and LPG imports jumped $2.15 billion to $7.76 billion.
Machinery imports increased by $497 million to $5.31 billion, while transport equipment rose $567 million to $2.19 billion. Imports of agricultural and other chemicals increased $294 million to $4.97 billion.
The rise in energy-related imports was particularly significant, accounting for a substantial portion of the overall increase in the import bill. “Pakistan’s external account is being squeezed primarily through the goods trade channel, where the increase in energy and other imports has more than offset the improvement in services and remittance inflows,” according to an analyst comment based on the data. “The key issue is that the improvement in non-goods components of the current account is not yet large enough to compensate for the higher merchandise import bill,” they added.
LNG imports fall sharply
There was, however, a notable decline in LNG imports, which fell $814 million, or more than 50%, to $791 million during the period. The reduction in LNG imports partly offset the increase in oil and petroleum purchases, although the overall petroleum import bill still rose substantially.
Textile imports also declined $135 million to $2.87 billion, while food imports were broadly stable at $3.97 billion.
Pakistan’s services account showed a marked improvement during March-August 2026. The services deficit narrowed to $501 million from $1.41 billion a year earlier, an improvement of $904 million.
Services exports increased by $1.04 billion to $5.40 billion, while services imports rose only $139 million to $5.90 billion.
The improvement in services earnings provided an important cushion against the widening goods deficit and helped prevent the current account from moving into a deeper deficit.
Remittances remain key support
Workers’ remittances continued to provide the strongest support to the external account. Remittance inflows increased $1.71 billion, or about 8.3%, to $22.38 billion during March-August 2026 from $20.68 billion a year earlier.
Total secondary income credit rose $1.65 billion to $23.80 billion, while the secondary income balance improved to $23.56 billion from $21.87 billion. “The resilience in remittances and the stronger services account are important offsets, but they are increasingly having to absorb a larger merchandise trade deficit,” said an analyst. “The sustainability of the external position will therefore depend heavily on the trajectory of energy prices, import demand and export growth in the coming months.”
Goods exports remained almost flat, declining 0.7% to $15.52 billion from $15.64 billion. That compares with the 9.9% increase in goods imports, creating a widening mismatch between export earnings and the cost of imported goods. The merchandise trade deficit consequently expanded by $3.24 billion, or around 21%, over the period.
The primary income deficit improved marginally to $4.26 billion from $4.37 billion, providing another relatively small offset to the trade deterioration.
The SBP data also showed that imports routed through non-banking channels increased by $219 million to $1.38 billion. Freight and insurance costs rose to $1.08 billion from $935 million, adding further pressure to the external trade account.
Overall, the March-August data point to a current account that remains close to balance but is increasingly dependent on remittances and services exports to offset a larger goods trade deficit.
For Pakistan, the combination of subdued merchandise exports and sharply higher energy-related imports remains the central external-sector challenge, particularly if elevated global oil prices persist.