FDI drops 34% to $1.6b as goods imports widen trade gap
BY Mahnoor | 18-07-2026
KARACHI: The Current Account Balance (CAB) showed a deficit of $649 million in June 2026, while in May 2026 it had a surplus of $500 million, and in June 2025 a surplus of $220 million. Overall, during FY26, the CAB had a deficit of $139 million, compared to a surplus of $1,838 million in FY25.
AHL noted that this decline is because total imports increased by 19.5% from the previous year, and total exports rose by 8%. This leads to a current account deficit of $139 million for FY26, versus a surplus of $1,838 million in FY25.
The monthly number was a big change from the positive amounts earlier in the year and wiped out most of the total surplus from the first nine months of FY26.
The overall goods and services account stayed under pressure all year. The total shortfall on trade in goods and services grew to $35.514 billion in FY26 from $29.639 billion in FY25.
Goods exports fell to $30.843 billion from $32.343 billion a year ago. This shows weaker demand in big markets and lower prices in some types of goods. But goods imports went up to $64.466 billion from $59.146 billion. This made the trade gap bigger, from $26.803 billion to $33.623 billion.
Services trade helped a little. Services exports rose to $10.04 billion from $8.45 billion, led by big growth in telecom, computer, and information services, which reached $4.6 billion. Services imports went up a bit to $11.93 billion from $11.28 billion. So the services deficit got smaller, from $2.84 billion to $1.89 billion.
Total exports stayed about the same at $40.877 billion, but imports went up to $76.391 billion from $70.432 billion.
Secondary income helped the foreign account, with workers sending home 8.6% more money, reaching a record $41.585 billion in FY26, up from $38.300 billion. The year’s secondary income surplus hit $43.813 billion, compared to $40.315 billion before.
In June alone, money sent home from workers abroad was $3.475 billion. This is less than the $4.252 billion in May but still more than the same month last year. Official transfers and other current transfers added smaller amounts.
The primary income account, which tracks earnings from investments and interest payments, got a little better. Its gap shrank to $8.438 billion from $8.838 billion, helped by slightly less money going out compared to the previous year.
In June, there was a $649 million deficit, unlike May’s $500 million surplus. This happened because import payments increased and remittances decreased seasonally. June’s goods imports were $6.147 billion, and goods exports were $2.595 billion. Services exports were $956 million, and services imports were $931 million, giving a small services surplus for the month.
Overall, the current account was in surplus for the first three quarters, but the last quarter and June’s numbers caused a small yearly deficit.
In financial year 2026, the financial account had a deficit of $1.21 billion, compared to a surplus of $1.58 billion in FY25. The State Bank of Pakistan’s gross reserves, which include cash foreign currency holdings but exclude unsettled claims on the Reserve Bank of India, were $19.689 billion at the end of June 2026, up from $15.836 billion a year earlier. Reserves excluding cash reserve requirement and statutory cash reserve requirement were $18.500 billion.
The nearly balanced current account for the full year hides a clear widening of the underlying trade gap. The increase in imports, especially goods, was faster than the small recovery in services exports and the continued growth in remittances. Goods exports did not return to the levels seen in FY25, making the external sector more reliant on secondary income flows.
Pakistan received 1.6 billion dollars in foreign direct investment in fiscal year 26. This is 34 percent less than the 2.48 billion dollars received in fiscal year 25.
In June 2026, net FDI was only 14 million dollars. This is a 94 percent decrease compared to 210 million dollars in June 2025 and 214 million dollars in May 2026.
Looking at countries: China was the biggest source with $862 million in FY26 (down 28% from $1.205 billion), then Hong Kong with $339 million (down 28%). The UAE gave $236 million (down 20%), but Switzerland grew with $205 million (up 22%). Other countries had net money leaving.
By sector: the power sector got the most money, $958 million (down 19% from last year), then financial business with $805 million (up 15%). Electrical machinery got $146 million, while the food sector and others had more money leaving than coming in.
By country, China was still the biggest source with $862 million in FY26. The yearly trend shows that FDI in FY26 is much lower than the average of the past 10 years, continuing a pattern of ups and downs seen over the last decade.
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