ISLAMABAD (Feb 27, 2026) Business leader and former president of the Islamabad Chamber of Commerce, Shahid Rasheed Butt, on Friday voiced serious concern about the rapidly widening trade gap, warning that the persistent imbalance between exports and imports is putting increasing pressure on the country’s fragile external account and overall economic stability.
He said Pakistan’s trade deficit with nine regional countries widened by 41.32 percent in 2025. Exports to China stood at $1.467 billion in 2025, slightly down from $1.482 billion a year earlier, while imports surged to $11.097 billion from $8.907 billion, an increase of 24.58 percent.
Butt said repeated boom-bust cycles, a difficult business climate, weak governance and low investment continue to suppress exports. He noted that periodic fiscal and monetary stimulus has pushed domestic demand beyond sustainable limits, fuelling inflation and draining foreign exchange reserves amid a political preference for exchange rate stability. Each downturn, he added, has eroded investor confidence and undermined policy credibility.
He said security concerns have weighed on exports to neighbouring markets, while geopolitical tensions have dampened regional trade flows. Shahid Rasheed Butt warned that India’s forthcoming free trade agreement with the European Union could pose a challenge to Pakistan’s exports to the bloc despite its GSP+ preferential access.
Domestically, he linked recent economic pressures to conditions set by the International Monetary Fund. The Fund has called for full cost recovery in utilities, particularly in the power sector. Although electricity tariffs were recently reduced, he said this was achieved by retiring older, high-cost debt, adding that the debt service surcharge could be raised if required. He said there is little evidence of sustained improvement in the sector’s performance.
He also referred to the IMF’s caution against easing fiscal and monetary policy to stimulate industry. However, the government later introduced targeted incentives, including subsidies for rice exporters, following India’s lifting of its export ban.
Shahid Rasheed Butt urged policymakers to focus on export-oriented manufacturing, adopt modern technology, and reduce production costs, warning that without structural reforms, the trade imbalance will persist, affecting foreign reserves, exchange rate stability and consumer prices.
