ISLAMABAD: Pakistan’s merchandise exports slipped back into negative territory in February, reversing a brief recovery seen a month earlier and raising fresh concerns about the outlook for overseas shipments amid escalating tensions in the Middle East.

The setback follows five consecutive months of contraction, with exports showing a modest rise in January, offering cautious optimism that a recovery might be taking shape. That momentum, however, proved short-lived as February data signalled renewed pressure on the external sector.

Trade analysts warn that the unfolding crisis in the Middle East could weigh further on export performance, particularly by disrupting trade routes, dampening demand in key regional markets, and adding uncertainty to global supply chains.

With geopolitical risks mounting, exporters now face heightened volatility in the months ahead. In absolute terms, export proceeds fell 8.76pc to $2.27 billion in February from $2.49bn a year ago, the Pakistan Bureau of Statistics (PBS) said on Tuesday.

Trade gap widens by one-fourth to $25.04bn in 8MFY26

On a month-on-month basis, export proceeds dipped by 25.63pc in February. Negative growth in exports has continued since August of the current fiscal year, except in July, when proceeds grew by 16.43pc year on year. Export earnings posted negative growth, with proceeds declining by 20.41pc in December. This follows a 14.54pc drop in November, 4.46pc in October, 3.88pc in September, and 12.49pc in August, reflecting persistent pressures on the country’s external trade performance. However, in January, exports posted a modest 3.3pc growth.

In the first eight months (July-February), export proceeds recorded negative growth of 7.30pc, falling to $20.46bn from $22.07bn in the corresponding period last year. Last month, the government announced several measures, including a reduction in energy rates, to minimise pressure on the country’s trade performance.

Currently, the exporters are grappling with subdued global markets and the high cost of doing business in the country. The textile exporters have already complained about contractions owing to the high cost of doing business. In FY25, export proceeds rose 4.67pc to $32.106bn against $30.675bn in the preceding year.

Trade deficit

According to the PBS data, imports fell 1.68pc to $5.25bn in February from $5.34bn over the corresponding month of last year. Month-on-month, imports decreased 9.51pc.

In the first eight months of 2025-26, the import bill grew by 8.06pc to $45.51bn, up from $42.11bn in the corresponding period last year. The import rose 6.57pc to $58.38bn in July-January FY25 from $54.78bn over the previous year.

The trade deficit narrowed 4.63pc to $2.98bn in February from $2.85bn over the corresponding month of last year. The trade deficit swelled 24.98pc to $25.04bn in July-February 2025-26, up from $20.04bn over the corresponding period last year. The trade deficit for FY25 widened by 9pc to $26.27bn, up from $24.11bn in the preceding year.

Published in Dawn, March 4th, 2026

ISLAMABAD: The Privatisation Commission board on Tuesday recommended the inclusion of the Faiji Fertiliser Company (FCC) in the Arif Habib-led consortium that won the auction for Pakistan International Airlines (PIA).

Last December, the consortium had successfully bid Rs135 billion for a 75 per cent stake in the national flag carrier. The FFC was initially among the bidders but had withdrawn from the process ahead of the auction. It had later joined the winning consortium on December 25.

It should be mentioned that the Privatisation Commission board’s recommendation has now paved the way for the consortium to buy the remaining 25pc stake in PIA for the consortium to take full control of the flag carrier.

On Tuesday, the Privatisation Commission held a meeting, which was chaired by the Adviser to the Prime Minister on Privatisation, Muhammad Ali.

According to a press release, in accordance with the terms of the share purchase and subscription agreement, the FFC was nominated by the consortium, with Arif Habib Corporation Limited serving as the lead member.

The commission board, after due review, endorsed the nomination and confirmed that FFC fulfilled the applicable eligibility and regulatory requirements, the press release added.

However, the statement said that the proposed inclusion of FFC in the consortium was subject to approval by the Cabinet Committee on Privatisation and the federal cabinet, as required under the applicable framework.

The Arif Habib-led consortium includes Fatima Fertiliser (34.1pc), Fauji Fertiliser (33.9pc), Lake City (16pc), and the City School with AKD (Aqeel Karim Dhedhi) Group (16pc).

Energy prices surged on Tuesday, sending stocks tumbling and the dollar rising as investors worried about inflation and the inability of central banks to help with interest rate cuts.

World oil prices soared around nine percent and European natural gas prices rocketed for a second day running as the war disrupted Middle East exports.

Brent North Sea crude, the international benchmark, topped $85 a barrel for the first time since July 2024.

The US and Israeli attacks on Iran and its retaliation across the region have upended regional energy flows, with the crucial Strait of Hormuz — through which about a fifth of global oil transits — effectively closed off.

The war has also fuelled fears of a fresh energy crisis that could ramp up inflation.

“The higher energy costs are fueling inflation concerns, pushing out rate cut expectations for some and increasing rate hike possibilities for others, while also raising earnings concerns that stem from higher operating costs and a potential slowdown in consumer spending,” said Briefing.com analyst Patrick O’Hare.

Wall Street’s main indices opened sharply lower, with the tech-heavy Nasdaq Composite dropping two percent.

European markets were hit even harder with losses of three per cent and more.

“European markets are being hit hard as the full inflationary impact of the war in Iran truly comes home to roost,” said Joshua Mahony, chief market analyst at Scope Markets.

Data showed an unexpected rise in eurozone core inflation, adding to concerns.

Forex.com analyst Fawad Razaqzada said that the inflation concerns have diminished chances of an interest rate cut in the eurozone.

“That’s why we have seen a huge drop in stock markets today with even gold also unable to find much love,” he said.

The European Central Bank’s chief economist Philip Lane said in an interview with the Financial Times published on Tuesday that a lengthy Middle East conflict and sustained drop in energy supplies could trigger a “spike” in eurozone inflation and hit regional growth.

Threat to energy supplies

New strikes were reported Tuesday across the Middle East, including Israeli bombardment on Lebanon and a drone attack on the US embassy in Saudi Arabia’s capital Riyadh.

The conflict started with US and Israeli strikes on Iran over the weekend, which sparked retaliatory Iranian attacks and showed no sign of abating as it entered its fourth day.

Iran has unleashed missiles and drones across the Middle East, including at Saudi Arabia, Qatar and Dubai, while threatening explicitly to drive up global energy costs.

A general in Iran’s Revolutionary Guards threatened to “burn any ship” seeking to navigate the Strait of Hormuz.

The Dutch TTF natural gas contract, considered the European benchmark, shot up more than 40 pc to over 60 euros on Tuesday — its highest level since January 2023, in the wake of the price spike triggered by the Ukraine war.

European natural gas prices had surged 50 pc on Monday after Qatar’s state-run energy firm said it had halted liquefied natural gas production due to strikes.

The rise in energy costs could give most central bankers a headache as they look to bring down inflation while also cutting interest rates to support their economies.

“A spike in energy prices creates a dilemma for central banks,” said Rodrigo Catril at National Australia Bank.

“Stagflation makes central banks very uncomfortable, a longer-lasting energy shock is inflationary and at the same time it weakens growth,” he added, referring to a high inflation and low growth environment.

The dollar, seen as a safer bet in times of economic unrest, extended gains against major rivals.

Asian equities extended Monday’s losses, with Seoul diving more than seven pc as investors returned from a long weekend.

Tokyo shed more than three pc while Hong Kong, Shanghai, Sydney, Wellington, Taipei and Jakarta were also sharply lower.