Pakistan's Trade Deficit with Gulf Nations Widens Amid Rising Imports

Strategic Insights -

Pakistan's trade deficit with Gulf nations has surged 28.4 percent to $1.4 billion in July, driven by rising imports from the region, according to the State Bank of Pakistan (SBP). The increased deficit is attributed to the country's reliance on petroleum supplies from Gulf Cooperation Council (GCC) states, with imports from the UAE reaching $816 million in July and $8 billion in FY25.

The widening deficit reflects the country's limited exports to GCC nations, with exports totaling $277.3 million in July, a 12.5 percent year-on-year decline. Pakistan's imports from the GCC states totaled $17.9 billion in FY2024-25, nearly matching earnings from the country's textile exports.

Key Takeaways:

  • Pakistan's trade deficit with Gulf nations widened 28.4 percent to $1.4 billion in July, driven by rising imports from the region.
  • Exports to GCC nations fell 12.5 percent year-on-year to $277.3 million, while imports rose 19 percent to $1.68 billion.
  • Pakistan's imports from the UAE reached $816 million in July and $8 billion in FY25, making it Pakistan's largest oil supplier in the bloc.
  • The country's reliance on petroleum supplies from GCC states led to a widening deficit, with imports totaling $17.9 billion in FY2024-25.
  • The free trade agreement (FTA) with the GCC is expected to improve market access and increase Pakistan's competitiveness in the region.
  • Pakistan has significant potential in IT services exports to the Middle East and North Africa (MENA) region, with the FTA set to help diversify its export base.

Statistics:

  • Pakistan's trade deficit with Gulf nations: $1.4 billion (July), $1.09 billion (July last year); 28.4% increase
  • Exports to GCC nations: $277.3 million (July), $317 million (July last year); 12.5% decline
  • Imports from GCC states: $1.68 billion (July), $1.4 billion (July last year); 19% increase
  • Imports from the UAE: $816 million (July), $6.7 billion (FY25); 21% increase
  • Exports to the UAE: $2.12 billion (FY25); $1.48 billion (FY24)
  • Overall trade deficit: $26 billion (last year), 9% increase

Sources:

  • State Bank of Pakistan (SBP) data
  • Topline Securities Limited
  • Karachi-based research firm
  • Pakistan Bureau of Statistics
  • Arif Habib Limited
  • European and US markets (GSP+ and tariff issues)