The current account posted a deficit of $1.2 billion in 1HFY26 as compared to a surplus of $957 million in the same period last year. Almost all the gap is perhaps due to worsening food trade balance –from a surplus of $151 million in 1HFY25 to a deficit of $1.8 billion in the 1HFY26. Apart from that notable increase in imports is in the transportation sector – as cars sales are growing and record imports of heavy vehicles (mainly busses by Punjab government). The balancing acts are lower oil prices which kept the petroleum imports in check and robust growth in export in services (both in information communication technology and other business services). Within good exports, one of the top performers is value added textile exports –knitwear, bedwear and readymade garments combined exports are up by 9 percent to $6.3 billion in 1HFY26 –it constitutes 70 percent of total textile exports and 40 percent of overall good exports – barring these, goods exports fell by 13 percent. There is no progress in other manufacturing exports –down by 2 percent. The best performer within the segment is engineering goods – up by 39 percent to $187 million. There is a buzz about growing exports here and there, but nothing else is significant to mention. The real dent in the trade deficit is from worsening food trade. Here two items (rice and sugar) delta from the previous year’s first half is $1.2 billion – we exported $344 million of sugar in 1HFY25, and its imports stood at $172 million – over half a billion-dollar sweet shock. The rice exports fell by 45 percent to $901 million, due to India coming back in export market and closing our borders with Afghanistan. On the other hand, food imports are growing at normal pace (if not higher) – palm oil imports are up whopping 20 percent to $1.8 billion in 1HFY25, and other food item imports jumped by 35 percent to $1.1 billion. Growing population and stricter checks on informal imports are explaining the growth in food imports. The saving grace (apart from home remittances and services exports) is lower oil prices – due to it, petroleum imports are downby 3 percent to $7.1 billion.This is despite growing sales of petroleum products, as the oil prices averaged$66/barrel in 1HFY26 versus $77.4/barrel in 1HFY25. The trade balance of goods, nonetheless, worsened by 37 percent to $15.8 billion. One may assume that there would be some trade surplus in services as exports are upbeat. However, that is not the case, the deficit is increased by 14 percent to $1.7 billion. The services imports stood ats second highest ever in December (at $1.3 bn), due to very high travel services import ($373 mn in Dec 25) – up by 50 percent to $1.7 billion in 1HFY26. This is perhaps due to increase in international travel, and it’s largely covered by foreign airlines. One may assume, with PIA’s privatization, in a year or so, some of this travel to shift to the national air carriers. Anyhow, the services exports keep on having an upbeat momentum – up by 16 percent to $4.8 billion in 1HFY26. Telecommunications, computer and information services, are up by 20 percent to $2.2 billion and stood at highest ever monthly level of $437 million in December. The good news is that it is not the only growing area, as growth in other business services is even more robust –up by 25 percent to $1.0 billion in 6MFY26. At this pace, IT and other business services to be over $6 billion for the full year. Increasingly individuals and firms are venturing into services exports – mainly providing back-office services. The tax on salaried individualsis 30 percent plus while its mere 1 percent on services exports (including free lancing) and for firms (be it in domestic businesses or goods exports) the tax is close to 30 percent (if not higher) while its mere 1 percent on services. That partially explains why individuals and businesses are moving towards services exports and there might be some cases of misreporting to evade taxes. Whatever it is, the exports services are becoming significant. The top performer is none other than home remittances, which is up by 11 percent on a higher base to reach $19.7 in 1HFY26. With peak season coming from Feb to May (Ramzan to bakar eid), the remittances may cross $42 billion in the full year and may keep the current account deficit well within 1 percent of GDP. However, that might be enough to bring the growth back, inflows in capital and financial accounts are required where FDI is down by 43 percent to mere $808 million in 1HY26. There is nothing to take home on the financial account either. However, better inflows are expected in the second half, and these are imperative to trigger a growth momentum.