Pakistan's services exports have recorded their strongest growth in years, expanding by nearly 19 percent in FY26, with the IT sector leading the charge. The impressive performance stands in stark contrast to the mixed trends seen in merchandise shipments, suggesting a structural shift in the country's external earnings. Main Developments Official data from the Pakistan Bureau of Statistics shows services exports reached $10.04 billion in FY26, up from $8.45 billion the previous year—a growth of 18.81 percent. In rupee terms, the increase was even sharper at 19.33 percent, climbing to Rs2.815 trillion from Rs2.359 trillion. Monthly figures for June were particularly striking, with exports jumping 37.20 percent to $955.91 million compared to $696.60 million in the same month last year. Telecommunications, computer, and information services remained the primary drivers throughout the fiscal year. Read also: MCB Bank's Half-Year Profits Climb to Rs28.1bn Amid Rate Cuts Breaking down the components, exports of telecommunications, computer, and information services surged 20.42 percent to $4.60 billion, while other business services rose 27.22 percent to $2.15 billion. Travel services also saw a remarkable 52.74 percent increase, reaching $1.115 billion. Background This growth builds on a steady upward trajectory. In FY25, services exports had already grown 9.23 percent to $8.39 billion from $7.68 billion in FY24, according to State Bank of Pakistan data. The acceleration in FY26 marks a significant jump from that pace. Not all sectors shared in the boom. Transport services exports actually declined by 6.61 percent to $933 million, highlighting the uneven nature of the expansion. Meanwhile, services imports rose more modestly at 5.67 percent to $11.93 billion. Why It Matters The narrowing trade deficit in services—down 33.38 percent to $1.894 billion from $2.843 billion—offers a bright spot in Pakistan's external accounts. This improvement could help ease pressure on the current account and foreign exchange reserves. With IT and travel services showing double-digit growth, the country appears to be diversifying its export base beyond traditional goods. The transport sector, however, still dominates imports, rising 4.05 percent to $4.88 billion, followed by travel services imports at $2.91 billion. What's Next Policymakers will watch whether this momentum can be sustained into FY27, particularly given the volatility in global demand and the ongoing challenges in the merchandise trade sector. The continued strength of IT exports will be a key indicator. Questions remain about whether the growth in travel services can be maintained and whether transport exports can recover from their decline. The data also raises expectations for further policy support to boost high-value services exports.