Pakistan, US Trade Deal to Help Boost Exports: Finance Ministry

The Ministry of Finance has stated that Pakistan’s recent trade deal with the United States is expected to significantly boost exports.

According to the Monthly Economic Update and Outlook released on Thursday, Pakistan entered FY2026 with stable macroeconomic conditions and improved growth prospects, backed by a stronger external and fiscal position.

The report highlighted that Large-Scale Manufacturing (LSM) has been recovering since April 2025, peaking in June, with further momentum expected from improvements in the automotive and fertilizer sectors. Government reforms aimed at encouraging private-sector growth, investment facilitation, easing inflation, and accommodative monetary policies are expected to strengthen business confidence.

The Finance Ministry noted that a favorable global environment, growing demand from trade partners, and the US trade deal will support exports, while workers’ remittances will help ease trade deficit pressures despite tariff-driven imports.

However, the report cautioned that flood-related damages could create fiscal strains and disrupt food supplies in affected areas. Inflation is projected to remain between 4–5 percent in August 2025.

During FY2025, agricultural credit disbursement rose 16.3 percent to Rs. 2,577.3 billion, while imports of agricultural machinery surged 123.9 percent to $14.4 million in July FY2026. Urea offtake in the Kharif season increased by 2 percent, whereas DAP offtake slightly dipped by 0.7 percent.

The LSM sector showed a 4.1 percent year-on-year increase in June 2025, though it fell 3.7 percent on a monthly basis, leading to a cumulative decline of 0.74 percent in FY2025 compared to a 0.78 percent growth last year.

In July FY2026, the current account deficit narrowed to $254 million from $348 million in July FY2025. Exports rose 16.2 percent to $2.7 billion, while imports grew 11.8 percent to $5.4 billion, widening the trade deficit slightly to $2.7 billion from $2.5 billion last year.

Meanwhile, overseas employment also improved, with the Bureau of Emigration & Overseas Employment registering 63,255 workers in July 2025, up 23.9 percent from June.