Pakistan’s trade deficit widens 26% in July as imports surge

ISLAMABAD: Pakistan’s trade deficit increased by 26% during the first month of the fiscal year 2026-27, mainly driven by a sharp rise in imports, according to the latest data released by the Pakistan Bureau of Statistics (PBS).

The widening gap between imports and exports highlights growing pressure on the country’s external trade position at the beginning of the new fiscal year. Imports increased by around 19% in July, with higher purchases recorded across several major categories, including food products, machinery, transport equipment, textiles, agricultural inputs and metals.

According to the PBS data, the country’s food import bill reached $805.4 million in July 2026, equivalent to more than Rs224 billion. The increase reflects continued reliance on imported food products and essential raw materials to meet domestic demand.

Among food items, imports of milk, cream and food products prepared for infants rose by 25% to $18.7 million. Pakistan also imported significant quantities of spices, soybeans, palm oil and pulses during the month.

Sugar imports were also recorded during July, with the country importing around 112 metric tonnes, adding to the overall food import bill.

Machinery imports rise sharply

Machinery emerged as one of the major contributors to the increase in the import bill. Machinery imports jumped by 41% to $1.31 billion during July compared with the corresponding period.

The increase covered a wide range of equipment used in key sectors of the economy. Imports included machinery for power generation, offices, textile manufacturing, agriculture, construction and telecommunications.

The rise in machinery imports could indicate increased demand for equipment and investment-related goods across different industries, although it also contributed significantly to the expansion of the overall trade gap.

Vehicle imports register strong growth

Imports of transport equipment, including vehicles, also witnessed substantial growth during the month. The import bill for the category increased by 40% to $420 million.

The increase in vehicle and transport-related imports added further pressure to the country’s import expenditure, particularly as several other major import categories also recorded double-digit growth.

Textile-related imports increase

Pakistan’s textile sector also recorded higher imports during July. Imports of textile-related products, including raw cotton, increased by 15% to $680 million.

The rise in raw cotton and other textile inputs indicates continued demand from the country’s large textile manufacturing and export industry. Since the textile sector remains a major contributor to Pakistan’s exports, higher imports of production inputs can also be linked to industrial activity.

Agricultural inputs and chemicals

Imports of agricultural machinery, equipment and chemicals increased by 23%, taking the combined import bill for the category to more than $1 billion.

The increase comes as demand remains high for inputs and equipment required by the agriculture sector. Higher imports of such goods can support domestic production but simultaneously add to the country’s foreign exchange requirements.

Metals import bill also rises

The country also witnessed a significant increase in imports of metals, including gold, iron and steel. Imports under the category increased by around 23%, while the import bill for precious metals alone crossed $730 million.

The broad-based rise across food, machinery, transport, textiles, agricultural inputs and metals suggests that the increase in imports was not confined to a single sector.

The latest figures indicate that controlling the trade gap will remain an important challenge for policymakers during the new fiscal year. While higher imports of machinery, industrial inputs and agricultural equipment may support economic activity, a sustained increase in imports without a corresponding rise in exports could place additional pressure on Pakistan’s external account.