The State Bank’s latest 4MFY26 data has rung major alarm bells. The country’s current account deficit (CAD) has ballooned to $733 million, a staggering 256 per cent increase over the same period last year.

Pakistan’s imports of goods and services have jumped by 15pc and 12pc respectively, while foreign direct investment has declined by 26pc. The surge in CAD is not due to industrial investment growth; it is an economic statistic driven by stagnant exports and a deficit in investor trust.

At first glance, the jump in imports may be mistaken for some industrial investment recovery. But scratch beneath the surface, and a more worrying story emerges — one of profligate “political” import-decisions, consumption-driven excess, and a complacent trade policy, failing to lean into exports as the cure for our external woes.

A clear red flag is the composition of imports. Significant portions of the import surge seem to be driven by consumption. Petroleum and transport, including electric buses and cars, are consumption-driven and not conducive to generating income in dollars.

Capital goods can expand productive capacity and support exports. Consumer goods — particularly those of a discretionary nature — do not. They drain foreign exchange without generating future earnings.

Pakistan requires disciplined import management, not a laissez-faire approach, with a need to shift to the ‘import on merit’ model that preserves external stability

The flood of consumer........

© Dawn Business