Pakistan’s Trade Deficit with Middle East Narrows Amid Regional Conflict
Islamabad – Pakistan’s trade deficit with the Middle East decreased by nearly 3% during the first eight months of fiscal year 2025-26 (July-February), as ongoing conflicts in the region commence to impact commercial activity and bilateral engagement. The Planning Commission of Pakistan has cautioned the government about potential economic repercussions, including higher energy costs and pressure on remittance inflows .
Decline in Trade Deficit
The trade deficit with the Middle East decelerated to $9.047 billion in July-February FY26, down from $9.299 billion in the same period last year, according to data from the State Bank of Pakistan . In fiscal year 2025, the trade gap with the region widened 7.37% to $13.974 billion from $13.014 billion in FY24.
Impact on Exports
Exports to the Middle East fell 1.07% to $2.122 billion in the first eight months of FY26, compared to $2.145 billion during the corresponding months of the previous year . Exports to Saudi Arabia decreased by 5.53% to $463.71 million from $490.87 million a year ago, even as imports from the kingdom increased by 5.66% to $2.61 billion from $2.47 billion . Exports to the UAE grew slightly, increasing 0.71% to $1.43 billion from $1.42 billion, with key export products including rice, bovine carcasses, and cotton ensembles . However, imports from the UAE rose by 4.59% to $5.46 billion from $5.22 billion .
Fluctuations in Regional Trade
Trade with other Middle Eastern countries showed varied trends. Exports to Bahrain fell 4.88% to $32.55 million, while imports dipped 4.68% to $148.46 million . Exports to Qatar experienced a more significant decline of 13.12% to $69.84 million, with imports as well falling by 16.59% to $1.96 billion . Kuwait saw a surge in exports from Pakistan, increasing 21.99% to $94.19 million, but imports plummeted 21% to $979.46 million . Exports to Jordan decreased to $31.71 million from $42.84 million, while imports rose to $12.24 million from $9.17 million .
Impact on Imports
Overall imports, largely consisting of petroleum products, decreased by 2.41% to $11.169 billion in 8MFY26 from $11.444 billion a year ago . In FY25, imports rose 5.64% to $17.081 billion from $16.169 billion in FY24 . A further decline in imports is anticipated with the compilation of March trade data.
Broader Economic Implications
The Planning Commission has warned of potential economic repercussions from the Gulf crisis, including higher energy costs, pressure on remittance inflows, and disruptions to exports and financial stability . Remittance inflows, projected at $42 billion for the current fiscal year, could be at risk if the conflict persists . Experts suggest that while the immediate impact may be limited, medium-term risks exist, particularly if expatriate employment in Saudi Arabia and the UAE is affected . Inflation in the region is also rising, potentially eroding the savings of overseas Pakistanis.
Published in Dawn, March 24th, 2026