Lead

Pakistan closed fiscal year 2025-26 with a current account deficit of $139 million, reversing a surplus of $1.838 billion recorded in 2024-25, the State Bank of Pakistan reported, according to Dawn. The full-year gap remained modest relative to a sharp monthly shortfall of $649 million in June 2026, largely because remittance inflows reached a record level near $41.6 billion. Dawn’s reporting linked the outcome to stagnant export performance, elevated imports that produced a merchandise trade deficit exceeding $35 billion, and a 34 percent decline in foreign direct investment to $1.64 billion. Early data for the opening days of FY27 pointed to fresh pressure on portfolio flows from the Gulf amid renewed regional conflict, even as remittances from those countries had so far held up.

Coverage Comparison

Dawn’s coverage framed the $139 million deficit as evidence of continued external-sector fragility rather than a sign of durable strength. One strand of reporting emphasised structural weaknesses: goods exports fell while services exports rose only enough to produce marginal overall growth, imports stayed high, and an agricultural trade imbalance widened as food imports climbed and raw food exports dropped sharply. Another strand connected the figures more directly to the Gulf conflict that began in late February, noting disrupted oil prices, reduced foreign investment appetite, and the risk that a prolonged war could eventually affect remittances. Across the accounts, the central bank’s data on quarterly swings—deficits in three of four quarters offset by a large third-quarter surplus—and the contrast between remittance support and weak trade performance formed the common factual core. Early FY27 portfolio movements, including a Bahrain withdrawal from domestic bonds and a large UAE drawdown later replaced by Saudi funds, were presented as immediate illustrations of how regional tensions can transmit into Pakistan’s external accounts.

Key Claims

  • Pakistan recorded a current account deficit of $139 million in FY26, compared with a surplus of $1.838 billion in FY25, as reported by Dawn citing State Bank figures.
  • Remittances reached approximately $41.6 billion in FY26, up from $38.3 billion the previous year, providing the main buffer against a larger deficit, according to Dawn.
  • Foreign direct investment declined 34 percent to $1.64 billion in FY26, Dawn reported.
  • The merchandise trade deficit exceeded $35.5 billion in FY26; goods exports fell to $30.843 billion while services exports rose to $10.034 billion, leaving overall exports of goods and services only marginally higher, Dawn stated.
  • The current account posted a $649 million deficit in June 2026 after a $500 million surplus in May, with three of four quarters in deficit and only the third quarter recording a large surplus of $1.647 billion, according to Dawn.
  • Food imports rose nearly 12 percent to over $9 billion while raw food exports plunged almost 30 percent; rice and vegetable exports fell sharply and sugar imports rose after earlier exports of the same commodity, Dawn reported.
  • In the first 10 days of FY27, Bahrain withdrew $30 million from domestic bonds ($21 million from T-bills and $9 million from Pakistan Investment Bonds), and no Gulf investment inflows were recorded, Dawn reported, citing State Bank data.
  • The UAE withdrew $3.5 billion held in the State Bank of Pakistan’s account; Saudi Arabia replaced the amount, helping avoid an immediate current-account imbalance, according to Dawn.
  • Dawn reported that the ongoing Gulf conflict had not yet affected remittances from Gulf countries, though currency specialists expressed concern that a prolonged conflict could eventually do so.
  • Foreign investment inflows from the region were described as having diminished amid the conflict and higher oil-price volatility, with Pakistan importing roughly three-quarters of its energy needs, Dawn reported.