Federal Minister for Commerce Jam Kamal Khan on Monday informed the National Assembly that Pakistan’s trade deficit has declined from USD 27.47 billion in FY23 to USD 24.11 billion in FY24, attributed to decreasing imports and rising exports.
Responding to questions during the National Assembly’s question hour, he said that Pakistan’s trade deficit slightly widened to USD 10.4 billion in the first two quarters of FY2024-25 (July-December), compared to USD 10.3 billion during the same period of the previous fiscal year.
The minister said that Pakistan’s imports exceeded USD 5 billion in December 2024, reaching USD 5.2 billion. This increase pushed the monthly trade deficit beyond USD 2 billion, standing at USD 2.35 billion in December 2024.
He attributed the rise in imports to the ongoing economic recovery, with both the Asian Development Bank (ADB) and the International Monetary Fund (IMF) revising Pakistan’s growth projections upward for FY25 to 3.0% and 3.2%, respectively. The uptick in imports reflects revived industrial activity, with several key sectors experiencing growth.
In December FY25, compared to the same month in FY24, imports of power generation and transmission equipment-such as solar panels, transformers, and converters-increased by 60%, reaching USD 319 million. Similarly, industrial machinery and equipment imports rose by 20%, while imports of textile industrial machinery surged by 40%, indicating an expansion in production capacity.
Imports of auto parts for heavy vehicles and trailers climbed by 58%, reflecting growth in the transport and logistics sectors. Additionally, imports of heavy equipment and parts more than doubled, registering a 109% increase.
This broad-based rise in industrial imports underscores the growing demand for infrastructure and production-related equipment, driven by economic expansion and improved business sentiment. The surge in imports has also supported rising domestic demand, encouraged by declining inflation and lower interest rates.
The minister emphasized that Pakistan relies on an export enhancement strategy to bridge its trade deficit. He noted that various initiatives led by the Ministry of Commerce had contributed to narrowing the deficit and achieving export targets.
He highlighted several initiatives, including the final stages of the Pakistan-Gulf Cooperation Council Free Trade Agreement (Pak-GCC FTA) negotiations, the completion of the biennial review of the European Union’s GSP Plus status, and the operationalization of Preferential Trade Agreements (PTAs) with Turkiye, Uzbekistan, and Azerbaijan. Transit Trade Agreements with Uzbekistan and Tajikistan are also operational, while 14 protocols in the food and agriculture sector have been signed with China.
Finalization of the PTA with Afghanistan is underway through stakeholder consultations. A proposal for the expansion of the FTA with China has been finalized in consultation with trade bodies. Reviews of trade agreements with Malaysia and Indonesia are in progress. The SME Internationalization and Export Readiness Programme is also being pursued in collaboration with the Milan Chamber of Commerce & Industry.
South Korea’s Trade Minister, Inkyu Cheong, has outlined an ambitious plan to relocate Korea’s industrial base from its Northeast Asian neighbors to Pakistan, following the signing of the Economic Partnership Agreement (EPA) between the two countries.
In May 2024, Pakistan and Cambodia agreed to establish a joint trade committee to enhance trade and investment, comprising top business associations from both nations. Additionally, in November 2024, Pakistan and Belarus strengthened their bilateral relations by signing 15 significant agreements and memorandums of understanding (MoUs).
For trade promotion, the minister said that under the “Look Africa” policy, four country exhibitions were held in Kenya, South Africa, Nigeria, and Egypt, with Ethiopia scheduled for January 2025. International exhibitions, including the Engineering and Healthcare Show, FoodAg, and TEXPO 2024, have been organized.
Business-to-business (B2B) engagements, under government patronage, are ongoing with Saudi Arabia, Azerbaijan, Russia, Uzbekistan, China, Belarus, and Malaysia. The “Rebranding Pakistan” initiative aims to enhance governance through digital platforms. Efforts are being made to maximize the performance of Trade Officers through Key Performance Indicators (KPIs) and a digital portal for monitoring.
The preparation of the National Horticulture Policy is underway. Discussions with the US Trade Representative are ongoing to secure market access for Pakistani mangoes, fresh dates, beef, and the renewal of the Generalized System of Preferences (GSP).
Pakistan has also initiated trade dialogue with the United Kingdom to consolidate and enhance Pakistan’s market share post-Brexit.
The Ministry of Commerce, in collaboration with the Trade Development Authority of Pakistan (TDAP), is working to boost agricultural exports. Active collaboration with foreign missions and embassies of trading partners in Pakistan is also being pursued to explore export opportunities.
The creation of the Pakistan Land and Port Authority is underway to facilitate trade at land border crossing points. The rejuvenation of the National Trade and Transport Facilitation Committee and the formulation of Pakistan’s Trans-shipment Policy are also in progress.
The Pakistan Institute of Trade and Development (PITAD) is strengthening the capacity of Commerce Ministry officers, with a Head of Research appointed to build in-house research capabilities for data-driven initiatives. The National Tariff Commission (NTC) is actively engaged in safeguard measures to protect Pakistan’s export interests in overseas markets.
Under the National Tariff Policy 2019-24, four budget exercises have been completed, with 6,500 tariff lines rationalized and 2,198 tariff lines reduced to zero duty, providing over Rs. 92 billion in relief to industry and trade.
For Budget FY24-25, pre-budget seminars were held, stakeholder consultations conducted, tariff proposals analyzed, and rationalization recommended by the Tariff Policy Board. The Ministry has drafted and presented the second Tariff Policy (2025-29) for stakeholder input.