Karachi:
Pakistan registered a $ 103 million -dollar deficit in May 2025 and narrowed from a $ 235 million deficit in the same month last year, but turned over $ 47 million profit in April 2025.
Although Pakistan issued a rare $ 1.8 billion profit in the first eleven months of FY25 – marking a significant turnaround from the $ 1.6 billion deficit that was recorded in the same period last year – it feels that the underlying vulnerability in the external sectors remains a cause for concern.
“The trade deficit expanded in May 2025 and rose to $ 3.2 billion compared to $ 2.2 billion in the same period last year,” AHL wrote. The total trade balance issued a $ 27 billion deficit in 11MFY25, up from $ 23 billion in the same period last year.
“We expect the country to place a $ 1.6 billion profit surplus in the FY25 after 14 years,” the Broker House said. “This growth is mainly due to an increase in transfers of 26% year to year to $ 38.1 billion in our view.”
The surplus was largely driven by a sharp 26% year to year jumps in workers’ transfers, which rose to $ 38.1 billion. This influx has helped dampen the impact of an expanded trade deficit as the goods imported by 11% to $ 54.1 billion and surpass the modest 4% growth in goods exports that amounted to $ 29.7 billion.
Exports faced a new battle in May 2025, sliding with 19% years to year to $ 2.4 billion, while technology exports once seen as a potential growth engine fell down 1% to $ 329 million. This underpretesty emphasizes Pakistan’s struggle to diversify and expand its export base.
Nasheed Malik from Topline Securities noted that Pakistan registered monthly IT exports worth $ 329 million in May 2025, reflecting a slight fall of 1% year to year, but an increase of 4% on a month-to-month basis. This export was also higher than the 12-month average of $ 314 million. This especially marked the first decrease in the year of the year after 19 consecutive months of growth. The export revenue was an average of $ 16.5 million per year. Day in May 2025, up from $ 15.9 million in April 2025.
Cumulatively it reached exports approx. 3.5 billion dollars over the course of 11MFY25, showing a strong increase of 19% year to year. This impressive growth is attributed to several key factors: the expansion of Pakistani IT companies’ client base globally, especially in the GCC region; Relaxation from the State Bank of Pakistan (SBP) for the permitted withholding limit in the exporters’ specialized foreign currency accounts from 35% to 50%; allowance of stock investments abroad through these accounts; And the stability of the Pakistani Rupee, which has called on exporters to repatriate a greater part of their earnings.
Pakistani IT companies have also actively engaged with international clients, as demonstrated by their participation in major global events such as Leap 2025 in Saudi Arabia and the Qatar web meeting 2025, Malik said.
Significant development in the FY25 is SBP’s introduction of a new category share investment abroad (EIA) specific to export-oriented IT companies. Under this provision, IT exporters can now acquire equity content in foreign units by using up to 50% of the proceeds from their specialized foreign currency accounts. This measure is expected to increase IT exporters’ confidence and incentive repatriation of export earnings to Pakistan.
Meanwhile, the service sector remains in deficit and emits a gap of $ 2.7 billion for the period, as service exports have not offset demand for the sustained import. The primary income deficit, which largely reflects surplus review and interest payments on external debt, amounted to a hefty $ 7.9 billion in 11MFY25.
Adding to the Concern is the sharp decrease in the influx of foreign direct investment (FDI), which dropped to $ 1.98 billion, indicating the cautious attitude of foreign investors in the midst of Pakistan’s challenging economic and political landscape.
Analysts warn that the recent surplus is not structural, but cyclic, highly dependent on transfers and import compression. “If imports rebounds or transfer growth are slowing down, the profits could return quickly,” noted a market observer.
The outlook for the external account remains uncertain, with potential risks derived from unstable global oil prices and rising debt treatment needs, both of which could struggle Pakistan’s fragile external position.
In May 2025, Pakistan’s deficit of primary income significantly narrowed with 47% year to year to $ 777 million compared to $ 1,478 million in May 2024, largely due to the absence of intense profits recorded in the same period last year. In one month to month, however, the deficit was expanded by 31%.
Meanwhile, the balance of secondary income improved by 12% years to years and rose to $ 3.9 billion in May 2025 from $ 3.5 billion in May 2024, supported by strong influxes such as workers’ transfers. However, in one month to month, the secondary income fell by $ 13% from $ 3.5 billion registered in April 2025.
