Pakistan’s current account (C/A) reverted to a surplus of c.US$0.5bn in May 2026, bringing the cumulative balance back into surplus at c.US$0.3bn in 11MFY26 (vs. a surplus of US$1.6bn in the same period last year). The sequential improvement was primarily driven by a sharp increase in remittances (record high of US$4.3bn) alongside a c.5% MoM moderation in imports.
The goods trade deficit (as per PBS) narrowed to US$2.8bn in May (vs. US$4.3bn in April), reflecting a sharp decline in imports (-19% MoM to c.US$5.5bn). Petroleum imports fell c.37% MoM to US$1.4bn, while non-energy imports also softened, barring textiles. On the exports side, momentum improved, led by textiles (+11% MoM), resulting in overall exports increasing c.9% MoM to US$2.7bn.
Remittances surged to a record US$4.3bn in May (+20% MoM), likely supported by Eid-related inflows. On a cumulative basis, remittances increased c.9% YoY to US$38.1bn in 11MFY26, continuing to provide a critical buffer against structural trade deficits. Meanwhile, SBP FX reserves rose c.8% MoM to US$17.2bn, supported by improving external liquidity.
Oil relief supports outlook, but risks remain
We continue to expect the current account to remain broadly within the SBP’s 0–1% of GDP guidance. The recent decline in oil prices following easing US–Iran tensions has provided meaningful support to both inflation and external account expectations. If sustained, lower energy prices should help contain import growth and moderate CPI pressures. In addition, recent measures aimed at supporting exporters, including the abolition of the export surcharge and duty-free machinery imports, could provide a gradual boost to export competitiveness. While remittances are expected to remain a key pillar of external stability, renewed geopolitical tensions, particularly involving Israel and Lebanon, remain a key upside risk to oil prices and the external account outlook.
