Interior Minister Mohsin Naqvi has revealed that Pakistani businessmen have moved billions abroad over the past three to four years. Business leaders, in response, continue to hold press conferences, laying out a familiar catalogue of concerns: policy inconsistency, misgovernance, and a persistent lack of trust in the system. Their arguments are neither new nor entirely unfounded, but they circle within a debate that seems to offer no clear exit. And so, the discussion goes on.
Yet, amid this prolonged exchange of claims and counterclaims, one uncomfortable truth remains: there appears to be no pragmatic, apolitical, and non-controversial pathway to bring back even a fraction of this massive outflow. Perhaps, then, the more urgent question lies elsewhere.
As the global environment grows increasingly uncertain — shaped by shifting alliances, economic pressures, and geopolitical tremors — how resilient are Pakistan’s two lifelines of foreign exchange: exports and remittances? While capital continues to seek safety beyond borders, can these inflows sustain the balance, or will they too begin to feel the strain?
The answer may define not just an economic direction, but a national moment of reckoning.
Remittances, for now, are holding the line, enabling reserves to be managed, obligations to be met, and confidence to be maintained, though they are not a substitute for a strong export base
Pakistan’s external sector offered a telling contrast in March 2026. Exports weakened noticeably, while workers’ remittances surged — once again stepping in to steady an otherwise fragile external account.
Exports fell to $2.264bn, down 14.4 per cent year-on-year, with declines spread across key sectors. Textiles, the backbone of the export base, slipped, while agriculture and food exports saw a sharper contraction. Cumulatively, exports for July–March stood at $22.73bn, reflecting an 8pc decline — pointing to deeper structural constraints: high energy costs, expensive financing, and limited diversification.
A closer look at the composition of exports reveals the depth of the challenge. Textile shipments, despite remaining dominant, declined to around $1.33bn in March, while agriculture and food exports dropped sharply to nearly $419m, reflecting both price and volume pressures.
Even segments such as manufacturing, mining and energy exports recorded double-digit contractions, highlighting that the slowdown is not sector-specific but systemic. This decline is partly attributable to the US-Iran war that raged throughout March, but partly it reveals well-known structural weaknesses.
On a cumulative basis, the export trajectory over the fiscal year reinforces this concern. The gap between last year’s $24.72bn and this year’s $22.73bn for the July–March period is not merely statistical — it reflects lost momentum in an already narrow export base, still heavily reliant on a few traditional sectors and vulnerable to global demand cycles.
The trade deficit during July-March widened to $27.81bn as imports during this period consumed $50.54bn, underscoring a familiar imbalance — exports struggling to keep pace with persistent import demand, especially for essential inputs.
There was, however, a brighter thread within the broader fabric. Services exports — led by information technology (IT) and telecommunication — continued to grow at a healthy pace, reaching $6.46bn during July–February.
This segment remains one of the few areas where Pakistan is quietly building resilience, driven by freelancing, digital services, and higher value-added exports. Yet even here, a services deficit persists, reminding us that progress is partial, not complete.
Monthly trends also suggest that while the services sector is expanding, it is not immune to fluctuations. IT and telecom exports, for instance, saw slight sequential declines in recent months, even as year-on-year growth remained strong. This indicates a sector that is promising but still evolving.
In contrast, remittances once again served as a dependable cushion. Inflows rose sharply to $3.83bn in March, largely due to seasonal factors around Ramadan and Eid. For the nine-month period, remittances reached $30.3bn, marking steady growth and reinforcing their role as a stabilising force.
A breakdown of these inflows shows continued concentration in a few key corridors. Saudi Arabia and the United Arab Emirates remained the largest contributors, followed by the United Kingdom and the United States. This geographic pattern underscores both strength and vulnerability — strength in established migration channels, and vulnerability in over-reliance on a limited set of host economies.
On a year-on-year basis, however, March remittances showed a modest decline, suggesting that even this reliable inflow is not entirely insulated from changing economic conditions abroad, in the present case, amidst war and geopolitical turmoil.
This dependence also ties Pakistan’s stability to external conditions, particularly in the Gulf. As geopolitical tensions rise and energy markets fluctuate, the same forces that support remittance inflows can also inflate the import bill. Higher oil prices may boost liquidity in host economies, but they simultaneously increase Pakistan’s external financing needs. It is a delicate equation — one that works, until it doesn’t.
Remittances, for now, are holding the line. They are enabling reserves to be managed, obligations to be met, and confidence to be maintained. But they are not a substitute for a strong export base.
Ultimately, the path forward remains unchanged, even if often repeated: reduce cost pressures, expand into value-added sectors, diversify markets, and restore competitiveness. In a world growing more uncertain by the day, the urgency of these reforms is no longer theoretical; it is immediate.
Published in Dawn, The Business and Finance Weekly, April 20th, 2026
