Ayesha Saba

Pakistan’s services exports received a significant boost during the first half of FY2026 as information technology–related services recorded strong growth, helping support external earnings at a time when goods exports remained under pressure, according to the Monthly Economic Update and Outlook issued by the Finance Division.

Official data show that IT services exports increased by 19.8 percent to $2.2 billion during Jul–Dec FY2026, emerging as the primary driver of overall services export performance. The expansion in IT-related exports provided a partial offset to the widening trade deficit and contributed to stabilising the external account during the period.

The Finance Division reported that total goods and services exports amounted to $20.3 billion in the first half of FY2026, broadly unchanged from $20.4 billion in the corresponding period of last year. Within this overall figure, the contribution of services exports, particularly IT services, became increasingly important as goods exports faced headwinds from global demand conditions and structural challenges.

The strong performance of IT services exports reflects continued growth in Pakistan’s digital and technology-oriented sectors. Increased demand for software development, IT-enabled services, and digital solutions from international markets supported export earnings during the period. The report highlighted that services exports have shown greater resilience than traditional goods exports, benefiting from a relatively lower dependence on physical inputs and logistics.

The growth in IT services exports has assumed greater significance amid rising import demand linked to improving domestic economic activity. As goods imports increased sharply during Jul–Dec FY2026, the contribution of services exports helped mitigate pressure on the current account by generating foreign exchange inflows without adding to import requirements.

The Finance Division noted that the expansion in services exports aligns with broader efforts to diversify Pakistan’s export base and reduce reliance on a narrow range of traditional commodities. The report emphasised that IT and related services offer substantial potential for value addition, employment generation, and export earnings, particularly in a global environment marked by technological transformation.

While the report did not provide a detailed sectoral breakdown within IT services, it underscored the importance of continued policy support to sustain growth momentum. Stable macroeconomic conditions, improved connectivity, and the availability of skilled human capital were identified as key factors underpinning the expansion of IT services exports during FY2026.

The performance of services exports also complemented other external sector inflows, particularly workers’ remittances, which rose by 10.6 percent to $19.7 billion during the first half of the fiscal year. Together, these inflows helped cushion the impact of a widening trade deficit and supported the buildup of foreign exchange reserves.

According to the Finance Division, services exports are expected to remain a critical source of external earnings in the coming months, particularly if global demand for digital services remains steady. The report indicated that further strengthening of the IT sector could help improve the external balance over the medium term by supporting export growth without a corresponding increase in imports.

The continued expansion of IT services exports during Jul–Dec FY2026 highlights the growing role of the services sector in Pakistan’s external trade profile. As the economy seeks to sustain growth while managing external vulnerabilities, services exports—led by IT—are increasingly seen as a key component of a more resilient, diversified export strategy.

Credit: INP-WealthPk