Qudsia Bano

Pakistan’s services exports are expected to play an increasingly important role in supporting external earnings in fiscal year 2026 as growth in information and communication technology services continues.

After a period in which goods exports faced pressure from supply-side disruptions, services exports have emerged as a key source of foreign exchange.

The Pakistan Investment Strategy 2026, prepared by Arif Habib Limited, notes services exports recorded strong growth during the first five months of fiscal year 2026.

During this period, services exports increased by 19% year-on-year over the 5 months of FY26. The report notes that information and communication technology services accounted for a significant share of this increase, with monthly export receipts reaching record levels in recent months.

The growth in services exports has helped partially offset the weakness in goods exports. Goods exports declined by 3.2% during the first five months of fiscal year 2026, mainly due to a sharp contraction in food exports following flooding-related supply disruptions. In contrast, services exports continued to expand, improving the overall external balance.

Information and communication technology services are projected to maintain strong momentum. Growth in this segment is expected to reach 5.5% in fiscal year 2026 and accelerate further in fiscal year 2027. The report highlights that sustained demand for digital services and improved export capacity are supporting this trend.

The services sector more broadly is projected to grow by 4.2% in fiscal year 2026 and 4.7% in fiscal year 2027. Alongside information and communication technology, wholesale and retail trade, transportation, storage, accommodation, and food services are also expected to contribute to overall services growth.

Services exports are becoming an increasingly important component of Pakistan’s external earnings mix. While traditional exports such as textiles continue to anchor goods exports, the rise in services exports is helping diversify foreign exchange inflows and reduce reliance on a narrow set of export categories.

The report also notes that strong services exports help improve the balance of trade in services, which, in turn, supports the overall current account position. This is particularly important at a time when imports are rising due to improving domestic economic activity.

Looking ahead, services exports are expected to remain a key buffer against external pressures in fiscal year 2026. Continued growth in digital services exports is expected to support foreign exchange inflows and strengthen external stability.

The report states that record-level receipts from information and communication technology exports reflect the sector’s growing contribution to the economy and its role in supporting Pakistan’s external accounts.

Credit: INP-WealthPk