• Pakistan’s external account narrowed during 1MFY27, with the current account (CA) recording a deficit of USD 328mn, compared with USD 814mn in 1MFY26. The improvement was primarily supported by a 9% YoY growth in exports and a 13% YoY increase in remittances. Meanwhile, the trade deficit widened to USD 3.3bn from USD 2.9bn last year, reflecting higher import pressures.
• Despite elevated import pressures, Pakistan’s external position remained resilient, supported by record workers’ remittances of USD 3.63bn. Remittance inflows, which exceeded the merchandise trade deficit, remained the country’s largest source of non-debt foreign exchange inflows and financed a significant portion of import payments. In addition, a 27% YoY increase in services exports helped contain external imbalances, reinforcing the importance of diversified foreign exchange inflows in maintaining current account stability.
• Looking ahead, the sustainability of Pakistan’s current account will largely depend on whether continued remittance growth can offset import-led pressures. While a stable exchange rate, improved fiscal discipline, and stronger debt-repayment capacity provide a supportive backdrop, geopolitical uncertainty in the Middle East and elevated global inflation remain key downside risks to future remittance inflows.

Courtesy – AL Habib Capital Markets Pvt Ltd.