Pakistan is grappling with economic difficulties as a result of the recent surge in global fuel prices. The country heavily relies on imported energy, leading to a significant impact on its balance-of-payments position. In April, Pakistan witnessed a monthly trade deficit of $4.07 billion, the highest level since June 2022, exacerbating its fragile economy.
The trade gap saw a substantial 43.5% increase month-on-month, primarily attributed to energy supply disruptions stemming from the Middle East conflict. This situation caused oil and gas prices to soar, resulting in a nearly tripled oil import bill. Consequently, the total import bill surged from $5.10 billion in March to $6.55 billion in April, marking a 28.41% rise that demand-management strategies could not mitigate.
The report highlighted that the export sector failed to counterbalance the escalating import bill. With ongoing energy shortages and no resolution in sight for the Middle East conflict, the report predicts that fuel prices will remain high. Pakistan’s export base, which is heavily reliant on textiles and constrained in capacity, is unlikely to effectively respond to the crisis.
Pakistan’s exports in the first three quarters of FY26 amounted to Rs6.39 trillion, reflecting a 7.14% decline in rupee terms compared to the previous year. This decline has further widened the trade deficit. The economic slowdown, coupled with regional challenges, is anticipated to impact the balance of payments as the fiscal year concludes.
Additionally, Pakistan’s equity market has experienced significant outflows due to the closure of numerous multinational companies. The country’s annual imports have been on the rise, primarily driven by purchases of fuels, electrical equipment, and edible oils.
