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KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh has voiced concern over the widening of the trade deficit during 2MFY27 by 18.1 per cent to $7.1 billion from $6.025bn. While acknowledging a slight recovery in overall economic activity, he said the increase in exports has been drastically outpaced by a surge in imports, warning that the resulting trade deficit poses an immediate threat to the country's macroeconomic stability and foreign exchange reserves. In a statement, he said the failure of exports to keep pace with rising imports is not due to a lack of industrial capacity or entrepreneurial intent, but is the direct result of the crippling cost of doing business. Export-oriented industries are being pushed to the wall, rendering them entirely uncompetitive against regional peers in global markets, he added. Warns costly energy, high interest rates crippling industrial, export sectors Outlining bottlenecks behind the devastating decline in industrial productivity, he said the central bank's exceptionally high policy rate remains an absolute barrier to the smooth functioning of trade and industry. No industry can achieve a profit margin high enough to service such expensive loans, which has stalled private-sector credit growth and prevented manufacturers from securing working capital or investing in essential long-term modernisation, he added. Upward revisions in electricity tariffs, driven by massive capacity charges and cross-subsidisation burdens, have made it impossible for factories to scale up production, the FPCCI chief said, stressing that without a regionally competitive power tariff, key export sectors will continue to underperform and lose global market share. The disruptions and cost of gas supply have eroded the narrow profit margins exporters rely on to secure international orders. Additionally, elevated petroleum prices continue to pose a major hurdle, triggering a multiplier effect on inland logistics, supply chains, and goods transportation — thereby heavily inflating the final cost of exportable goods before they even reach the ports, Mr Atif said. The domestic industries are burdened by the highest regional interest rates and exorbitant energy costs. Local manufacturing shrinks, and the economy inevitably pivots to expensive imports to meet domestic demand. This vicious cycle will lead to a wider trade deficit, a decline in export orders, and intense pressure on our national exchequer, he added. He urged the prime minister, the Ministry of Finance, the Ministry of Commerce, and the State Bank of Pakistan to immediately sit down with the business community to devise a crisis-response strategy to avert widespread industrial closures and rescue the FY27 export targets. He also demanded an aggressive reduction in the policy rate to provide affordable capital for industrial production, immediate rationalisation of electricity and gas tariffs to bring them in line with regional competitors, and targeted relief on petroleum levies for goods transport to reduce domestic supply chain costs. Published in Dawn, September 5th, 2026 Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.