Pakistan’s current account (C/A) posted a surplus of US$121mn in January 2026 – the third surplus in 7MFY26 – reflecting a sequential improvement in the external balance. That said, the cumulative 7MFY26 balance remains in a deficit of US$1,074mn (vs a surplus of US$564mn SPLY), implying relative normalisation of trade flows. The surplus was primarily driven by a narrowing in the goods trade deficit MoM (reduced imports). We highlight that the BoP (US$89mn) was partially offset by negative FPI (net), while FDI increased MoM, according to a report by IMS Research.
Goods trade deficit in January 2026 narrowed to c. US$2.6bn (4th largest in 7MFY26), as imports moderated by c. 7% MoM to US$5.3bn. Petroleum imports decreased to US$1.1bn (c. -32% MoM), reflecting seasonal softness in petroleum consumption. Non-energy imports showed a divergent trend, with Metals and Food imports increasing by c. 16% and 11% MoM, respectively, to c. US$0.6/0.9bn, respectively. Notably, Metal imports (iron and steel group) rose c. 3% MoM to c. US$0.4bn in January, likely indicating renewed construction activity, in our view. On the flipside, goods exports remained broadly flat MoM at c. US$2.8bn amid a surge in other exports, while Textile and Food exports declined by c. 8%/11% MoM to c. US$1.5bn/0.4bn, respectively. However, PBS data indicates Textile exports touched a 45-month high (c. US$1.7bn), underscoring resilience in the sector, which is likely to support the trade balance in the coming months, in our view.
Remittances moderated slightly by c. 4% MoM to US$3.5bn, remaining above the US$3bn level. Remittances have increased by a strong 11% YoY in 7MFY26 to US$23bn. The continued narrow spread between interbank and kerb rates appears to be sustaining formal inflows. Going forward, remittances are likely to remain strong in the remainder of FY26 amid upcoming Eid festivities.
