Pakistan's Trade Deficit with Gulf States Narrowed Sharply in July

Pakistan's trade deficit with Gulf states has narrowed significantly in the first month of the new fiscal year, thanks to a substantial decline in imports and a modest increase in exports. According to data compiled by the State Bank of Pakistan, the country's imports from Gulf countries dropped by 44.3% in July, while exports rose by 5.6%. This shift has resulted in a reduced trade deficit with several key partners.

The export proceeds showed moderate growth, particularly in the UAE, Saudi Arabia, and Jordan, while Qatar, Kuwait, and Bahrain weakened. The collapse in imports was driven primarily by energy-related purchases, which plummeted due to Pakistan's decision to slash petroleum and LNG buys from the UAE, Kuwait, and Qatar.

However, energy imports from Bahrain and Jordan increased during this period. This trend suggests that Pakistan's import flows are highly sensitive to geopolitical developments, particularly in energy corridors. The country has been heavily reliant on energy imports from Gulf states, with the UAE and Saudi Arabia accounting for 90% of its imports.