KARACHI: Pakistan’s current account deficit narrowed sharply in July, the first month of the new fiscal year, as goods exports climbed to their highest level in more than a year and a half, the country’s central bank reported.
The State Bank of Pakistan said the current account posted a deficit of $328 million in July, down from a revised $814 million in June and from $529 million in July 2025. The June figure was revised upward from a previously reported $649 million.
Merchandise exports rose to $3.008 billion in July, compared with $2.750 billion in the same month a year earlier, while imports climbed to $6.154 billion from $5.429 billion in July 2025.
The State Bank said the July export tally represented a 17% increase from June and a 9% rise from a year earlier, marking the strongest monthly performance in 19 months, even as imports held roughly steady from the prior month.
The improvement came as Pakistan opened the 2026-27 fiscal year, following a difficult year for the country’s external accounts. Pakistan posted a current account surplus of $1.838 billion in fiscal year 2025, its first surplus in two decades, but that gain did not carry into the new fiscal year, as import growth outpaced exports.
Workers’ remittances continued to cushion the external account, with Pakistan receiving $3.63 billion in remittances during July, a level analysts say has become one of the more reliable sources of foreign exchange for the cash-strapped economy in recent years.
Despite the narrower headline deficit, the trade picture remained under pressure: the goods trade deficit widened to $3.15 billion in July from $2.68 billion a year earlier, while the services sector also ran a deficit, with exports of $927 million against imports of $1.16 billion.
Separately, the State Bank reported that Pakistan’s Real Effective Exchange Rate, which measures the rupee’s value against a basket of major trading partners’ currencies, rose to 107.92 in July from 106.33 in June.
Pakistan’s external accounts have been a persistent source of strain for the South Asian nation of roughly 240 million people, which has repeatedly sought support from the International Monetary Fund and bilateral lenders including China, Saudi Arabia and the United Arab Emirates to avoid balance-of-payments crises.
In the eight months from July through February of the prior fiscal year, Pakistan had posted a current account deficit of $700 million, reversing a $479 million surplus in the same period a year earlier, a deterioration that analysts attributed to persistent structural weaknesses in the country’s trade balance.
Economists say the widening gap between imports and exports remains the central challenge facing Pakistani policymakers, even as remittance inflows and periodic export gains have offered intermittent relief to the external account.
