Pakistan's Trade Deficit, Explained
Why Pakistan imports far more than it exports, how energy prices drive the gap, and what the trade deficit means for the rupee.
What a trade deficit is
A trade deficit means a country spends more on imported goods than it earns from exported goods. Pakistan has run a goods trade deficit every year for decades, with imports often close to double the value of exports.
Energy is the biggest driver
Pakistan imports most of its crude oil, refined fuels and a growing share of LNG. When global oil prices rise, the import bill jumps quickly — the main reason the deficit peaked in FY2021–22.
Machinery, chemicals, edible oil and metals make up much of the rest.
How the gap gets paid for
Remittances from Pakistanis working abroad help cover much of the goods deficit. Loans, investment and support programmes cover the remainder. When those flows fall short, pressure builds on foreign-exchange reserves and the rupee.
What to watch
Monthly import figures, global oil prices and remittance inflows are the three numbers that best signal where the deficit is heading.