Pakistan recently posted its first current account surplus since 2011. Current surplus, which is the excess of a country's total receipts from exports of goods, services and income over its total payments for imports of goods, services and income, of $2.1 billion, is substantial, marking a significant turnaround for an economy that was predominantly southbound in the two years before the surplus month. Prime Minister Shehbaz Sharif hailed this as both a milestone worth celebrating and a sign of economic improvement. But should Pakistan celebrate?
According to data released by the State Bank of Pakistan, the country recorded a current account surplus of $2.1 billion in FY2024-25, equivalent to 0.5 per cent of GDP, compared to a $2.2 billion surplus in the previous fiscal year. The SBP attributes this turnaround to record-high remittance inflows of over $38 billion and a narrow trade deficit resulting from import moderation policies and rising export figures.
Pakistan’s modest export recovery came mainly from textiles and agriculture, aided by a weaker rupee and stable global demand. However, the country remains trapped in low-value exports with negligible diversification into higher-tech or value-added sectors. IT services provided a slight boost, with freelancers and software firms bringing in the much-needed dollars. Yet these gains were too small for exports to become a significant contributor to the surplus, which was primarily driven by import compression.
While the surplus offers a rare glimmer of hope, serious questions remain: Does it signal a real recovery, or is it merely a temporary relief? Have Pakistan's structural vulnerabilities, particularly its fragile external account, been truly addressed? Its key drivers also highlight that this isn’t a sign of a booming economy but rather suppressed consumption, falling industrial activity, and policy-imposed restrictions.
Given persistent challenges like years of high inflation, chronic IMF dependency and political instability, this improvement appears more like a pause in the storm than lasting stabilisation. The surplus is still vulnerable to global shocks and domestic policy slippages. Current account surplus implies a stable external side of the economy and a positive balance of international payments.
A stable surplus grows out of the economy's strength: export-led growth, consistent foreign direct investment, resilience to external shocks and a diversified economy. In contrast, Pakistan's recent surplus leans heavily on windfall (uninduced) remittances and artificial suppression of imports. There are reasons why it may not be wrong to say that it is a fragile fix.
In June 2025, Pakistan experienced record remittance inflows of $3.4 billion, a 7.9 per cent rise from the same month last year. Overall, FY25 remittances hit a historic $38.3 billion, up 26.6 per cent from FY24, with strong contributions from the Gulf region. These inflows helped push foreign exchange reserves to a 39-month high of $20 billion by mid-July 2025. While this support eased external pressures, it still highlights Pakistan’s heavy reliance on overseas workers rather than domestic economic strength.
Second, Pakistan’s imports fell sharply, dropping by almost 15 per cent in FY25, as strict controls and a weak economy reduced the need for machinery, fuel, and consumer goods. Lower industrial activity meant less demand for energy and raw materials, with petroleum imports alone shrinking by over 20 per cent, according to the State Bank of Pakistan. While this drop in imports helped the current account swing to a $2.1 billion surplus (0.5 per cent of GDP), it came from demand suppression rather than improved efficiency or competitiveness.
In reality, it reflects an economy under pressure, not one gaining sustainable strength. It’s like losing weight by skipping meals, not by getting healthier. Not surprisingly, this surplus is short-lived because it is also driven by import compression (restrictions on luxury goods, machinery) rather than real export growth. Therefore, the surplus may vanish once imports normalise.
The regional experience also points to the sustainability of export-led growth. Bangladesh achieved a more sustainable path with export-led growth, earning over $50 billion in FY25 from ready-made garments, leather, agro-products, and more, with shipments to the US alone rising by over 20 per cent.
Where Pakistan’s surplus came from squeezing demand, Bangladesh’s came from building capacity and expanding markets. The resilience of Bangladeshi surplus stems from strong industrial policy, global supply chain integration and continuous expansion into new markets. In Pakistan’s case, the surplus feels more reactive than structural. Pakistan cannot rely on import suppression forever, and the path to a durable surplus lies in a bold economic vision backed by effective reforms.
Textiles make up over 55 per cent of exports, but they bring low earnings compared to value-added industries. Bangladesh, for example, built its ready-made garment industry to over $50 billion in exports, while with a similar population base, Pakistan’s remains around $30 billion. This shift needs a clear industrial policy.
Small and medium industries should have better access to credit, modern machinery and quality improvement training. But none of this is possible without fixing the energy crisis, which makes electricity in Pakistan almost 30 per cent more expensive than regional competitors. Investing in cheaper and stable energy, while keeping policies predictable, will give businesses the confidence to grow and export.
Moving ahead, the government must improve the ease of doing business and create policies that encourage firms to invest in modern technology and skill development. Just as Bangladesh integrated into global supply chains, Pakistan must also build niche competitiveness in sectors where it can scale quickly, like engineering goods, pharmaceuticals and software development. A surplus driven by exports and productivity, not import bans or overseas workers’ money, is the only way to build real strength.
Mehvish Nida is an Economics MPhil student. Asad Ejaz Butt is an economist based in Boston, USA. He tweets/posts asadaijaz