Trade deficit climbs as export decline undercuts economic reform goals

Two key developments in recent weeks highlight the predicament facing trade policymakers. First, the rising trade deficit is putting pressure on the already fragile external accounts, driven by a surge in imports and weakening export growth. Exports in the first four months of FY26 were 4% lower than in the same period of last year, while imports were 16% higher. Given that the recent plans to restructure the economy place strong emphasis on export growth, the decline in export numbers is likely to raise concerns among stakeholders. The current account deficit, vis-à-vis the rising trade deficit, increased to $733 million in the first four months compared to $206 million in the same period of last fiscal year.