By Hasan

Pakistan’s trade and transit connectivity with Afghanistan and the wider region remains vulnerable to prolonged uncertainty, as declining bilateral trade underscores the economic cost of disruptions along the border.

According to the State Bank of Pakistan, Pakistan’s trade with Afghanistan fell to $242.9 million in July-February FY2026, down from $614.1 million in the same period of FY2025, reflecting the impact of continued instability on cross-border commerce.

Analysts say Pakistan’s regional engagement matters most when it delivers predictable systems for trade, transit and communication, reducing exposure to disruptions and strengthening support for exporters, transporters and border communities.

Efforts to improve connectivity have continued through regional initiatives. In July 2025, Pakistan, Afghanistan and Uzbekistan signed in Kabul a framework agreement for the joint feasibility study of the Uzbekistan-Afghanistan-Pakistan railway project, which Pakistan’s Foreign Office described as an important step toward regional trade, transit and development.

The same approach was reaffirmed at the 6th Pakistan-China-Afghanistan Trilateral Foreign Ministers’ Meeting in Kabul in August 2025, where the three sides reiterated cooperation in trade, transit and regional development, including support for extending the China-Pakistan Economic Corridor (CPEC) to Afghanistan.

These processes indicate that regional engagement can support stronger connectivity and more stable economic ties when translated into practical arrangements.

Dr Rubina Waseem, Associate Professor at the National University of Sciences and Technology (NUST), Islamabad, said that countries such as China can help institutionalise communication between Pakistan and Afghanistan, reducing the risk that engagement occurs only during crises.

She noted that regional economic integration, including potential CPEC connectivity extensions into Afghanistan, can create shared stakes in stability, while cooperation on intelligence-sharing and border management can make trade and transit arrangements more predictable.

Pakistan’s trade policy also reflects this direction. The Strategic Trade Policy Framework 2020-25 identifies CPEC and the Central Asia Regional Economic Cooperation platform as a basis for economic corridor development and links this objective with revisions to the Afghanistan-Pakistan Transit Trade Agreement (APTTA).

APTTA, the bilateral transit arrangement governing goods movement between the two countries, also established the Afghanistan-Pakistan Transit Trade Coordination Authority, a platform for reviewing transit arrangements, addressing operational challenges and improving cross-border trade.

Dr Sidra Ahmad, Assistant Professor at Bahria University, Karachi, said regional actors including China, Iran, Central Asian countries, Gulf states and international institutions can support sustained dialogue and de-escalation, while neutral forums can provide space for confidence-building.

Syed Basim Raza, Assistant Manager Research at the NUST Institute of Policy Studies, said a more durable economic relationship would require broader regional engagement, as instability in Afghanistan creates risks not only through security concerns but also through disruptions to connectivity and economic corridors.

He noted that such disruptions affect not only Pakistan but also China and Central Asian states, which have a direct interest in stable trade and transit routes.

According to him, coordinated regional engagement, combined with practical incentives for cooperation, can support more stable economic ties and improve the functioning of trade and transit corridors.

Credit: INP-WealthPk