By Moaaz Manzoor

Pakistan's trade deficit in goods and services narrowed to $3.29 billion in May 2026 from $3.34 billion in April, as a continued surplus in services trade helped offset part of the country's large merchandise trade gap, according to State Bank of Pakistan (SBP) data.

The improvement came despite lower export earnings, as a decline in imports and positive contributions from services exports helped reduce pressure on the external sector.

SBP data showed that total exports of goods and services stood at $3.21 billion in May, down from $3.52 billion in April. Imports of goods and services also declined during the month, falling to $6.50 billion from $6.86 billion, resulting in a modest improvement in the overall trade balance.

Merchandise trade remained the principal source of pressure on the external account. Goods exports amounted to $2.37 billion in May, down from $2.62 billion a month earlier, while imports stood at $5.69 billion compared with $5.99 billion in April. Consequently, the trade deficit in goods remained high at $3.32 billion.

In contrast, Pakistan maintained a surplus in services trade for the third consecutive month. Services exports reached $837 million, while imports totalled $809 million, resulting in a surplus of $28 million in May. Although lower than the surpluses recorded in March and April, the positive balance continued to provide support to the country's external position.

Information technology-related services remained the largest contributor to services exports. Telecommunications, computer and information services generated export earnings of $373 million during the month, accounting for nearly 45% of total services exports. Other business services contributed $174 million, while government goods and services exports stood at $83 million.

Travel services generated export earnings of $116 million, followed by transport services at $69 million. Together, these sectors continued to strengthen Pakistan's services export base and diversify foreign exchange earnings beyond traditional merchandise exports.

On the import side, transport services remained the largest component at $360 million, reflecting shipping and logistics costs associated with international trade. Travel services imports amounted to $132 million, while other business services and telecommunications, computer and information services imports stood at $103 million and $59 million, respectively.

The latest figures highlight the growing role of services exports in moderating Pakistan's external-sector pressures. While the merchandise trade deficit remained substantial, earnings from information technology, business and travel services helped cushion the impact of the goods trade imbalance.

A comparison with recent months shows that the overall deficit in goods and services narrowed from $3.39 billion in December 2025 to $3.34 billion in April 2026. However, it remained significantly higher than the $2.31 billion recorded in March, when both imports and the goods trade deficit were comparatively lower.

Overall, the latest figures show that while Pakistan's merchandise trade deficit continued to weigh on the external account, a sustained surplus in services trade helped limit the overall trade gap. The performance of information technology and other services exports provided an important buffer against external-sector pressures and supported a more balanced trade position during the month.

Credit: INP-WealthPk