FPCCI warns widening trade deficit will pressure Pakistan's forex reserves

Pakistan's trade deficit widened by 15.13 per cent to USD 10.792 billion during the July-September 2026 period, up from USD 9.374 billion in the corresponding period of the previous fiscal year, according to Pakistan Bureau of Statistics figures cited by the Federation of Pakistan Chambers of Commerce and Industry. FPCCI president Atif Ikram Sheikh warned that without immediate structural interventions, the continuous pivot to expensive imports to meet domestic demand will further exhaust the national exchequer and trigger a severe balance of payments crisis.

The FPCCI chief noted that the unsustainable trend persisted through the end of the quarter. In September 2026 alone, the trade deficit rose to USD 3.55 billion, a 6.15 per cent year-on-year increase from the USD 3.35 billion recorded in September 2025, the chamber said, citing the statistics bureau data.

Mr Sheikh attributed the widening trade gap to the exceptionally high cost of doing business in Pakistan, which he said severely hampers the competitiveness of local manufacturers against regional peers. He identified prohibitive interest rates, massive capacity charges on electricity and elevated petroleum levies as immense barriers to industrial productivity and value addition, and cautioned that the escalating import bill will exert severe pressure on national foreign exchange reserves.

To rescue the FY27 export targets and prevent widespread industrial stagnation, the FPCCI urged the Ministry of Finance and the State Bank of Pakistan to aggressively reduce the policy rate to single digits so manufacturers can access affordable working capital. It also called for the immediate rationalisation of electricity and gas tariffs to align them with regional competitors, alongside targeted relief on inland logistics to bring down domestic supply chain costs.