Pakistan’s current account (C/A) recorded a surplus of US$427mn in February 2026 – the fourth surplus in 8MFY26 and the largest FYTD – reflecting a sequential improvement in the external balance. The cumulative deficit for 8MFY26 narrowed to US$700mn (vs. a surplus of US$479mn SPLY). The monthly surplus was primarily driven by a moderation in imports, alongside improvements in both the services and income balances. The overall BoP (US$173mn), was supported by an increase in net FPI (from a negative balance last month), according to a report by IMS Research.
Goods trade deficit widened MoM to US$2.7bn in February 2026 (4th largest in 8MFY26), as exports declined by c. 10% MoM to US$2.5bn, more than offsetting a c. 4% MoM contraction in imports (c. US$5.2bn). Petroleum imports remained broadly flat MoM at US$1.2bn (SBP), while non-energy imports – particularly Agri-chemical/Machinery declined by c. 20%/9% MoM, respectively to c. US$0.7bn each. On the exports side (-10% MoM), the MoM decline was led by Textiles (-7% MoM to c. US$1.4bn), reflecting softness in demand.
Remittances remain robust at US$3.3bn in February (down c. 5% MoM), sustaining above the US$3bn level. Cumulatively, remittances have increased c. 10.5% YoY in 8MFY26 to US$26.5bn, likely supported by strong formal channel flows. While near-term remittance flows are likely to be supported by Eid festivities, prolonged stress in the GCC region – which accounts for c. 53% of total remittances – poses a risk to sustainability.
Forex reserves nearly flat MoM at US$16.3bn in Feb’26
SBP’s Forex reserves remained broadly stable in February at US$16.3bn (+1% MoM / +US$0.1bn). While we expect the current account to remain within the State Bank of Pakistan’s guided range of 0–1% of GDP, the risk balance is tilted to the upside, primarily driven by the potential for a sustained spike in oil prices amid the ongoing US–Iran tensions. As highlighted in our note Strait of Hormuz risk back in focus, sensitivities suggest that for every US$5/bbl increase in oil prices, the CAD widens by approximately 20bps of GDP. Export competitiveness also remains a near-term challenge amid evolving global trade dynamics although resilient remittance inflows should continue to provide a buffer to the external account, in our view.
