Pakistan’s trade deficit widened sharply in the first seven months of the current fiscal year, crossing $22 billion, despite a notable improvement in January driven by stronger exports and lower imports, official data showed.

Figures released by the Pakistan Bureau of Statistics showed the trade deficit during July-January FY26 rose 28.22% year-on-year, as imports increased 9.42% while exports fell 7.09%.

Total imports during the period reached $40.23 billion, compared with exports of $18.20 billion, resulting in a cumulative deficit of more than $22 billion.

In January, however, the trade gap narrowed to $2.73 billion, down 7% year-on-year and 29% month-on-month, according to provisional data. Imports during the month stood at $5.79 billion, while exports improved to $3.06 billion.

On a monthly basis, exports surged nearly 35%, while imports declined about 5%, helping contain the deficit, the statistics bureau said.

Analysts said the January improvement reflects short-term export recovery rather than a structural shift.

“While January numbers show a welcome contraction in the trade deficit, the cumulative picture remains challenging,” Topline Research said in a note. “The 7MFY26 trade deficit now stands at $17.2 billion, up 28% year-on-year, underscoring continued pressure on the external account.”

Topline Research said it maintains its full-year projections in line with central bank guidance, expecting exports to decline 1% and imports to grow 13% in FY26.

Analysts cautioned that sustaining export momentum will be critical in the coming months, as import demand remains elevated and global trade conditions stay uncertain.