Kamran
PAKISTAN’S export crisis is not only an issue of expensive electricity, high taxes or difficult global conditions but also a story of an economy struggling to earn enough internationally and imports continues to outpace the exports. The widening trade deficit exposes a deeper weakness: Pakistan has yet to build an export model capable of competing consistently on value, productivity, product diversity and market reach. Pakistan’s merchandise trade deficit widened by 18.11 percent year on year to $7.1 billion. The latest figures have made the picture more troubling.
According to the Pakistan Bureau of Statistics, Pakistan’s trade deficit widened to $10.77 billion in July–September FY2026–27, up from $9.37 billion a year earlier. Although exports grew by 11.13% to $8.45 billion but faster import growth further expanded the trade gap. Imports, however, climbed 13.20 percent to $19.21 billion from $16.97 billion. The resulting deficit stood at around $10.77 billion, nearly 15 percent wider than the previous year’s level. September offered some improvement in export performance. Shipments reached $2.96 billion, an increase of 18.49 percent from September 2025, while imports rose 11.01 percent to $6.49 billion. Yet the monthly trade deficit still reached $3.53 billion.
A single month of improved performance cannot offset the persistent quarterly trade imbalance. Pakistan needs sustained export growth across multiple sectors to finance its import bill. Otherwise, faster import expansion will continue to outweigh gains in export earnings. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has highlighted the growing trade deficit and mounting challenges confronting exporters. Key concerns include high borrowing costs, expensive energy, heavy taxes and inconsistent government policies. These factors increase domestic production costs, weakening the ability of Pakistani goods to compete in international markets. Electricity and gas prices, taxes, borrowing costs and delays in receiving tax refunds all influence production costs and working capital.
Pakistan’s textile sector has frequently cited high energy prices, advance taxation, limited liquidity and unstable policies as barriers to export growth. During February 2026 consultations, Ministry of Commerce and Textile and Apparel representatives also raised concerns over export financing and temporary import restrictions. Domestic costs alone do not explain Pakistan’s export weakness. Global competitiveness also depends on productivity, technology, innovation, economies of scale and value addition. Meanwhile, heavy reliance on textiles exposes Pakistan’s export earnings to global demand fluctuations, competition and rising production costs.
The Pakistan Economic Survey 2025–26 reported textile exports of $13.58 billion during July–March FY2026, down 0.5% year-on-year. Overall merchandise exports also declined by 8% to $22.74 billion, with textiles contributing nearly 60% of total earnings, highlighting Pakistan’s narrow export base. The absence of a broader export portfolio makes it harder to compensate for weakness in one sector through growth elsewhere.
The distinction between exporting raw materials and selling finished goods is central to Pakistan’s competitiveness debate. Pakistan does export value-added goods, including knitwear, readymade garments, bedwear and towels. The issue is not that the country has failed completely to move beyond raw materials. It is whether its industrial base has developed enough sophistication, productivity and product diversity to generate stronger earnings from the capabilities it already possesses.
The Pakistan Textile Council reported textile and apparel exports of around $18 billion in FY2026, while national exports stood at approximately $30.14 billion, highlighting the sector’s continued dominance amid declining export earnings. Competing in higher-value markets requires more than manufacturing finished goods. Buyers expect reliable quality, timely shipments, product traceability and compliance with international labour and environmental standards. Bangladesh provides a useful example through its strong presence in global garment supply chains. Although it faces economic challenges of its own, its apparel industry illustrates the intense competition Pakistan encounters in international markets. Pakistan’s challenge is further compounded by its dependence on a limited range of export products and destinations.
Developing new markets and product lines requires investment in marketing, certification, design and distribution. Those costs can deter firms accustomed to operating within familiar markets. The export debate also raises questions about how Pakistani businesses are managed and financed. Many firms remain closely controlled by founding families, a structure that can support long-term ownership but may limit access to external capital and specialized professional expertise when businesses resist opening their accounts or sharing decision-making. These activities require capital and professional skills. Companies that postpone them may preserve short-term control over costs, but they risk losing ground to competitors that build more capable organizations.
Pakistan’s $7.1 billion trade deficit in the first two months of FY2026–27 was an early warning. The subsequent quarterly deficit of approximately $10.77 billion has reinforced it. The immediate pressures of energy prices, taxation and financing costs are real. But they coexist with deeper constraints involving value addition, diversification, productivity, corporate governance and investment. Treating the crisis solely as a cost problem risks overlooking to build a broader and more resilient export base. The figures reveal a more specific weakness: the country has not yet generated enough sustained, broad-based export growth to match the pace of its import bill.
—The writer is contributing columnist.
