KARACHI: Businesses have expressed concern over the widening trade deficit during the first quarter of fiscal year 2026-27, with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) warning that rising imports could increase pressure on Pakistan’s foreign exchange reserves and macroeconomic stability.
FPCCI President Atif Ikram Sheikh, responding to the latest Pakistan Bureau of Statistics (PBS) data, said the continued expansion of the trade gap was a matter of serious concern for businesses and the broader economy.
According to PBS figures, Pakistan’s trade deficit widened by 15.13 percent to $10.792 billion during July-September 2026, compared with $9.374 billion in the same period of the previous fiscal year.
September Trade Deficit Rises 6.15%
The deterioration continued through the end of the quarter.
In September 2026 alone, Pakistan’s trade deficit reached $3.55 billion, registering a 6.15 percent year-on-year increase from the $3.35 billion recorded in September 2025.
The latest monthly figure added to concerns that the country’s import bill could continue to outpace export growth and put additional pressure on external financing and foreign exchange resources.
FPCCI Warns Of Pressure On Foreign Exchange Reserves
Atif Ikram Sheikh said the widening trade gap could place significant pressure on Pakistan’s foreign exchange reserves.
He attributed the trend in part to the high cost of doing business in Pakistan, which, he said, was weakening the competitiveness of domestic manufacturers against regional competitors.
The FPCCI chief argued that high production and financing costs are making it more difficult for local industries to expand output, add value and compete in international markets.
High Interest Rates And Energy Costs Hit Industry
According to Sheikh, prohibitive interest rates, heavy electricity capacity charges and elevated petroleum levies are among the major barriers affecting industrial productivity.
Higher financing costs increase the expense of working capital for manufacturers, while elevated electricity and fuel costs add to production and transportation expenses.
Businesses have argued that these pressures can reduce the competitiveness of Pakistani products in both domestic and international markets.
FPCCI Calls For Single-Digit Policy Rate
To support industrial activity and help meet FY27 export targets, the FPCCI leadership has called on the Ministry of Finance and the State Bank of Pakistan to pursue a significant reduction in the policy rate.
Sheikh urged policymakers to bring the policy rate into single digits, arguing that lower borrowing costs would provide manufacturers with more affordable working capital.
The business community has maintained that improved access to financing would help companies invest in production, maintain operations and increase their capacity to export.
Business Community Seeks Lower Energy Costs
The FPCCI president also called for the rationalisation of electricity and gas tariffs.
According to the business body, energy costs should be brought closer to levels faced by competitors in regional markets to improve the international competitiveness of Pakistani manufacturers.
Sheikh also called for targeted relief on inland logistics costs, which he said could help reduce expenses throughout domestic supply chains.
Trade Deficit Raises Balance Of Payments Concerns
The widening trade deficit has renewed attention on Pakistan’s external account, particularly as businesses seek stronger export growth to offset the country’s import requirements.
Sheikh warned that continued reliance on expensive imports to meet domestic demand could place additional pressure on the national exchequer and increase the risk of balance-of-payments stress.
He called for immediate structural measures to strengthen domestic production, encourage value addition and improve the competitiveness of export-oriented industries.
Export Growth Remains A Key Priority
With the first quarter of FY27 already showing a 15.13 percent increase in the trade deficit, businesses are urging policymakers to focus on measures that can support exports while controlling unnecessary import costs.
The FPCCI has linked lower financing costs, competitive energy tariffs and more efficient logistics with the ability of Pakistani businesses to expand production and compete in international markets.
The business community argues that addressing these structural cost pressures will be important for supporting export targets and preventing industrial activity from weakening further.