Pakistan’s Latest Balance of Trade: December 2025 Analysis and Macro Outlook
Pakistan’s balance of trade deficit narrowed to -804 billion PKR in November 2025, improving from -904 billion PKR last month and beating expectations. This marks a partial recovery from October’s deep deficit of -943 billion PKR. Key drivers include stronger exports and moderated import growth amid ongoing external shocks and fiscal tightening. However, structural trade imbalances and geopolitical risks persist, posing challenges for macro stability and monetary policy calibration.
Table of Contents
The latest Balance of Trade (BoT) data for Pakistan, released on December 2, 2025, shows a deficit of -804 billion PKR for November. This figure is a notable improvement from October’s -904 billion PKR and significantly better than the market estimate of -890 billion PKR, according to the Sigmanomics database. The deficit remains elevated compared to mid-2025 levels, but the narrowing trend signals some relief amid persistent external pressures.
Drivers this month
- Exports rose by 3.50% MoM, driven by textiles and agricultural goods.
- Imports growth slowed to 1.20% MoM, reflecting lower oil prices and restrained capital goods purchases.
- Remittances and foreign exchange inflows stabilized, supporting trade financing.
Policy pulse
The current deficit remains above the 12-month average of -790 billion PKR, indicating ongoing external imbalances. The State Bank of Pakistan’s inflation target of 6% remains challenged by imported inflation pressures, but the improved trade balance offers some monetary policy flexibility.
Market lens
Immediate reaction: The PKR appreciated 0.40% against the USD within the first hour post-release, while 2-year government bond yields declined by 10 basis points, reflecting eased external financing concerns.
Pakistan’s trade deficit has fluctuated widely over the past six months. The Sigmanomics database shows a peak deficit of -943 billion PKR in October 2025, the highest in the past year, followed by a steady improvement through November. Year-on-year, the deficit remains 8.50% wider than November 2024, underscoring persistent structural trade challenges.
Monetary Policy & Financial Conditions
The narrowing deficit aligns with the central bank’s recent rate hikes aimed at stabilizing the currency and curbing inflation. The SBP’s policy rate currently stands at 14.50%, up from 13.75% six months ago, reflecting tightening financial conditions. Reduced import demand and improved export receipts have helped ease pressure on foreign reserves, which hovered near $9.50 billion in November.
Fiscal Policy & Government Budget
Fiscal consolidation efforts, including reduced subsidies and improved tax collection, have indirectly supported the trade balance by limiting domestic demand for imports. The government’s budget deficit target of 6.20% of GDP remains ambitious but achievable if trade improvements persist.
External Shocks & Geopolitical Risks
Global commodity price volatility, especially in oil and wheat markets, continues to impact Pakistan’s import bill. Additionally, geopolitical tensions in the region and supply chain disruptions pose downside risks to trade flows and investor confidence.
Drivers this month
- Textile exports: 5.20% MoM
- Oil imports: -4.80% MoM
- Capital goods imports: 0.50% MoM
Policy pulse
The improved trade balance supports the SBP’s cautious approach to monetary policy normalization. Inflation remains above target, but easing external pressures may allow a pause in rate hikes.
Market lens
Immediate reaction: The PKR strengthened 0.40% versus the USD, while 2-year yields dropped 10 basis points, signaling improved investor sentiment post-release.
This chart highlights a clear trend reversal in Pakistan’s trade deficit after two months of deterioration. The narrowing deficit, driven by export gains and import moderation, suggests improving external balances and potential relief for the currency and monetary policy outlook.
Looking ahead, Pakistan’s trade balance trajectory depends on several volatile factors. We outline three scenarios with associated probabilities:
Bullish scenario (30% probability)
- Global commodity prices stabilize or decline, reducing import costs.
- Export sectors, especially textiles and agriculture, sustain growth above 5% MoM.
- Geopolitical tensions ease, improving trade routes and investor confidence.
- Result: Deficit narrows below -700 billion PKR by Q1 2026.
Base scenario (50% probability)
- Moderate export growth of 2-3% MoM.
- Import growth remains subdued but volatile due to commodity prices.
- Fiscal and monetary policies maintain current tightening stance.
- Result: Deficit remains near -800 billion PKR through early 2026.
Bearish scenario (20% probability)
- Commodity price shocks push import costs higher.
- Export demand weakens due to global slowdown or supply chain issues.
- Geopolitical risks escalate, disrupting trade flows.
- Result: Deficit widens beyond -900 billion PKR, pressuring reserves and currency.
Structural & Long-Run Trends
Pakistan’s persistent trade deficits reflect structural challenges, including reliance on commodity imports and limited export diversification. Long-term reforms in industrial policy, export incentives, and energy sector efficiency are critical to sustainable improvement.
Pakistan’s November 2025 balance of trade data signals cautious optimism. The narrowing deficit and stronger exports provide some breathing room for policymakers amid inflation and currency pressures. However, external shocks and structural imbalances remain key risks. Close monitoring of global commodity markets, geopolitical developments, and domestic reforms will be essential to maintain macroeconomic stability.
Key Markets Likely to React to Balance of Trade
The balance of trade is a critical indicator for Pakistan’s currency, bond, and equity markets. The following tradable symbols historically correlate with trade balance movements and are likely to react to future data releases:
- USDPKR – The USD/PKR exchange rate is sensitive to trade deficits, affecting currency valuation and import costs.
- KSE100 – Pakistan’s benchmark equity index reflects investor sentiment tied to macroeconomic stability.
- PSO – Pakistan State Oil’s stock price is influenced by import fuel costs and trade flows.
- BTCUSD – Bitcoin’s price can reflect capital flow volatility and risk appetite in emerging markets.
- EURPKR – Euro to PKR exchange rate also reacts to trade and geopolitical developments.
Insight: Balance of Trade vs. USDPKR Since 2020
Since 2020, Pakistan’s trade deficit trends have closely tracked movements in the USDPKR exchange rate. Periods of widening deficits correspond with PKR depreciation, while narrowing deficits coincide with stabilization or appreciation. This relationship underscores the trade balance’s role as a key driver of currency valuation and external sector health.
FAQs
- What is the current balance of trade for Pakistan?
- The latest figure for November 2025 is a deficit of -804 billion PKR, an improvement from -904 billion PKR in October.
- How does the balance of trade affect Pakistan’s economy?
- The trade balance influences currency stability, inflation, foreign reserves, and overall macroeconomic health.
- What are the main risks to Pakistan’s trade balance?
- Key risks include commodity price volatility, geopolitical tensions, and structural export limitations.
Takeaway: Pakistan’s trade deficit narrowing in November 2025 offers a positive signal, but sustained reforms and external stability are vital for lasting macroeconomic resilience.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 12/2/25
USDPKR – Exchange rate sensitive to trade deficits.
KSE100 – Equity index reflecting macro sentiment.
PSO – Oil sector stock impacted by import costs.
BTCUSD – Proxy for capital flow volatility.
EURPKR – Euro-PKR rate reacts to trade and geopolitics.
The November 2025 trade deficit of -804 billion PKR represents a 11.10% improvement from October’s -904 billion PKR and compares favorably to the 12-month average deficit of -790 billion PKR. This marks a reversal of the two-month worsening trend seen in September (-811 billion PKR) and October (-943 billion PKR).
Exports increased by 3.50% MoM, led by textile exports rising 5.20%, while imports grew modestly by 1.20%, with oil imports down 4.80% MoM. The moderation in import growth was critical in reducing the deficit.