Exports to Europe dip despite GSP+

Despite holding Generalised Scheme of Preferences (GSP+) status, Pakistan's exports to European markets saw a modest decline in the first quarter of 2026-27 compared to the previous year. The overall export figures to Europe dipped slightly, although there was a small uptick in revenue from southern and northern European nations during the July-September quarter.

Policymakers are expressing growing concerns over this trend. The ongoing conflict in the Middle East has exacerbated the decline in exports to these markets, compounded by the European Union's preferential market access granted to India, Pakistan's main competitor in textiles. According to data from the State Bank of Pakistan, exports to European countries contracted by 1.84% to $2.350 billion in 1QFY27, down from $2.394 billion in the same period a year earlier.

Trade analysts caution that the Middle East conflict could further dampen export demand, as rising energy costs are expected to squeeze consumer spending in Europe, which is already suffering from the economic fallout of the Ukraine war. Exports to northern Europe rose by 21.07% to $236.321 million in 1QFY27, up from $195.191 million in the corresponding period in the previous year.

In southern Europe, exports grew by 5.26% to $879.896 million in 1QFY27, compared to $835.862 million in the same period last year. Spain saw a 17.78% increase to $451.244 million, while Italy declined by 8.49% to $298.731 million. Exports to Greece rose 3.52% to $34.961 million, up from $33.774 million. However, exports to eastern Europe fell by 15.05% to $168.761 million in 1QFY27, down from $198.677 million.

Prior to Brexit, the United Kingdom was Pakistan's largest export destination. Since the post-Brexit period, Pakistan's exports to the UK have increased by 6.64% to $612.305 million in 1QFY27, compared to $574.171 million a year ago. Western Europe, comprising countries like Germany, the Netherlands, France, Italy, and Belgium, accounts for the largest share of Pakistan's exports to the EU.

However, exports to this region contracted by 8.51% to $1.065 billion in 1QFY27, from $1.164 billion in the same period last year. Exports to Germany declined by 12.77% to $389.116 million, while exports to the Netherlands, Pakistan's second-largest market, fell by 3.07% to $370.005 million. Exports to France decreased by 0.47% to $136.030 million, followed by a 7.57% decline to Belgium's $127.431 million.