Heavy Imports Causing Trade Imbalance: Pakistan’s over-reliance on imports, particularly from China, and underutilisation of its export potential have resulted in a growing trade imbalance. Pakistan failed to properly take advantage of the export opportunities created by developed markets, according to the Economic Survey 2024–25, which was published on Monday.
In 2025, global trade growth is predicted to slow to 1.7%. In order to manage growing financial and geopolitical risks, the government has responded by stepping up efforts to increase exports, fortify economic defences, and broaden trade alliances.
Pakistan’s beef and soybean import disputes with the US were settled. Trade with the US, one of the biggest markets in the world, is probably going to grow as a result of this action. The cotton trade is particularly important. Pakistan imported more than $700 million worth of raw cotton from the United States in FY24. Pakistan’s main export sector, textiles and clothing, is supported by this cotton, while imports are predicted to increase this year.
Goods imports increased by 11.8%, but exports only increased by 6.8%. The 9.3% growth in service exports was only marginally greater than the 7.9% increase in service imports. The trade balance is still under pressure from this trend.
Current Account Surplus and Rising Remittances Offer Relief
Between July and April of FY25, the current account reported a $1.9 billion surplus. Compared to the $1.3 billion deficit that was recorded during the same period last year, this result represents a significant improvement. After FY03, when it hit $4.1 billion, it is the second-largest surplus ever.
An important factor in this recovery was remittances. They grew by 31% in the first 10 months of FY25 and reached a record $4.1 billion in March. The external financial position was strengthened by these inflows.
In contrast to last year’s $4.2 billion inflow, the financial account experienced a $1.6 billion outflow. This shift resulted from lower-than-anticipated official loan disbursements and higher government debt repayments.
Markup payments increased 17% year over year to Rs6.4 trillion during July–March FY25. Higher borrowing levels were the cause of the increase. Nevertheless, a decrease in the policy rate contributed to lower debt servicing expenses. An estimated Rs800 billion to Rs1 trillion was saved by the government as a result.
