akistan’s trade performance has moved in a zig-zag pattern since the current government took office. A close look at the numbers shows why: export performance remains volatile, hostage to a narrow product mix and persistently low value addition.

In 2025, exports stood at approximately $40.67 billion, with momentum shifting sharply from month to month.

Overall, exports contracted by roughly 6 percent over the year, dragged down by weakening performance in the traditional mainstay sectors.

The government’s approach, spearheaded by the ministries and bodies overseeing trade, has been to pursue export-led growth largely through conventional tools and models. This approach has delivered occasional dividends, but not the structural improvement needed to close the gap between exports and imports.

Ambitious target

The government’s flagship response was Uraan Pakistan. It set export targets of $60 billion for 2029 and $100 billion for 2035. Given Pakistan’s regulatory environment and the cost of doing business, these targets are undeniably ambitious. They are not, however, unachievable — provided the country shifts decisively toward investment-led exports rather than treating investment and trade policy as separate tracks.

Reducing compliance costs and easing the regulatory environment should be a priority, both to lower costs at the border and beyond it. A lighter regulatory load will help narrow the export-import gap by making Pakistan a more attractive source.

Structural fault lines

1. There is a vast policy-implementation gap. Trade and investment are meant to reinforce each other but Pakistan’s treaty architecture suggests otherwise.

According to UNCTAD’s Investment Policy Monitor, Pakistan holds 53 bilateral investment treaties (BITs) but there has been little systematic effort to map or leverage them. Within South Asia, for instance, Pakistan has meaningful treaty linkages with only two countries, Sri Lanka and Bangladesh. Even the Sri Lanka agreement, in force since 1997, and the Bangladesh agreement, signed in 1995, remain underused. Strengthening the regional presence is essential both to boost exports and to improve the broader investment climate.

2. There is a mismatch between what Pakistan supplies and what markets demand. The export basket often does not reflect what its trading partners actually need. Data from the International Trade Centre illustrates the point starkly: Pakistan’s top export to China is unwrought refined copper and copper alloys, worth roughly $767 million. Yet China’s largest import category globally is integrated circuits and parts, worth some $425 billion. The disconnect could not be clearer.

3. The cost of doing business remains high. Excessive regulatory burden continues to make Pakistan a more difficult place to trade and invest than many of its regional competitors, adding friction at every stage of the export process.

4. Access to finance during periods of stress is often constrained. During the Covid-19 crisis, for example, industries with existing banking relationships often found financing withheld or subjected to tougher conditions precisely when they needed it most. Access to finance, particularly during shocks, remains one of the most persistent constraints on industrial growth in Pakistan. It is a key driver of the widening trade gap.

What needs to change

First, Pakistan must identify where policy and practice diverge, beginning with its bilateral investment treaties. Poorly leveraged BITs have, in some cases, contributed to capital flight and industrial relocation. The case of Lawrencepur is a cautionary example. Going forward, investment agreements should be explicitly linked to export targets, so that gains in investment translate directly into gains in trade.

Second, Pakistan needs structural reform to close the gap between what it produces and what global markets demand. This means moving toward a more competitive, comparative-advantage-driven export base. Such a shift will strengthen the broader business ecosystem and sharpen industrial competitiveness.

Third, reducing compliance costs and easing the regulatory environment should be a priority, both to lower costs at the border and beyond it. A lighter regulatory load will help narrow the export-import gap by making Pakistan a more attractive destination for investment.

Fourth, Pakistan must fix its access-to-finance mechanisms, easing the rigid conditions that currently constrain the business community, particularly during periods of economic stress. It is worth noting that large-scale industries often cite infrastructure, not finance, as their primary bottleneck. Access to reliable infrastructure is just as critical to growth as access to capital. 

The writer is a development economist specialising in public finance and monitoring and evaluation.