KARACHI: Pakistan’s current account swung to a deficit of $324 million in April from a surplus of $1.134 billion in the previous month as the nation’s trade gap widened due to higher imports stemming from supply disruptions and rising oil prices amid war in the Middle East.
Data from the State Bank of Pakistan (SBP) showed on Monday that the country posted a current account deficit of $12 million in April 2025. The shortfall was $252 million in 10 months of fiscal year 2026. This compares with a surplus of $1.7 billion seen in the same period last year.
Analysts highlighted global shock dynamics and an unfavourable base as reasons for the reversal in the current account balance. Additionally, a decrease in service surplus, along with a moderation in remittances, added to the current account deficit.
“The main driver [of a current account gap in April] was a 44 per cent month-on-month (MoM) widening in the goods trade deficit to $3.4 billion, as imports surged 22 per cent MoM to $5.97 billion against flat exports,” said Saad Hanif, head of research at Ismail Iqbal Securities.
“This largely reflects a higher energy import bill amid elevated global oil prices following the intensification of the Middle East conflict,” Hanif said.
“The secondary income cushion also thinned as workers’ remittances normalised 8.0 per cent MoM to $3,539 million, since March’s elevated print was flattered by Eid-related inflows (remittances still up 11 per cent YoY),” he added.
Hanif believes that April’s deficit should not be over-interpreted, as the overall situation remains reassuring. The current account from July to April of FY26 shows only a modest deficit, pointing to a broadly balanced external position.
“The key risk going forward is the persistence of the oil price shock. If global energy prices remain elevated through the remainder of 2026, the import bill could stay structurally higher, keeping the trade gap wide and pressuring the external account, with the full-year current account then contingent on continued resilience in remittances and services exports,” he said. “That said, no stress signals have emerged thus far, with the currency and FX reserves remaining stable to date.”
The energy shock from the months-long Iran war threatens to slow growth, raise inflation, and create vulnerabilities in the external account. Pakistan spends nearly one-fourth of its import bill on petroleum products, which made up 22.2 per cent of total imports in July-March FY25.
Brent crude was trading at about $110 a barrel on Monday.
Analysts warned that April’s deficit suggests that underlying external vulnerabilities persist, despite the temporary improvement seen in March, with the trade deficit continuing to widen on weak export momentum.
“Pakistan’s BoP position remains stable in the near term, supported by financing inflows, though it is skewed toward borrowings rather than non-debt inflows. Rapid import growth, more than exports, widens the external gap, pressuring the BoP and driving reliance on external financing, said Waqas Ghani, head of research at JS Global.
“The recent bond issuance demonstrates that international capital markets are willing to finance Pakistan’s transition, but that window of opportunity must be used to address the fundamental competitiveness gap that drives the trade deficit and keeps the external position fragile,” Ghani added.
The International Monetary Fund’s recent staff report projects a slight current account deficit for FY26, citing an increase in import growth over the remaining months.
For the current fiscal year, the SBP expects the deficit to be in the range of zero to 1.0 per cent of GDP.
