Pakistan exports to Europe fell in the first quarter of 2026-27, despite the country holding Generalised Scheme of Preferences Plus status, known as GSP Plus, which gives Pakistani goods reduced or zero tariffs in the European Union. Data compiled by the State Bank of Pakistan showed that exports to European countries contracted 1.84 percent to 2.350 billion dollars in the first quarter, from 2.394 billion dollars a year ago. For exporters, the fall is a warning, because Europe is one of Pakistan’s most important markets, and a fall there affects jobs, factory orders and foreign exchange earnings.
The GSP Plus scheme is meant to help. Under the scheme, eligible exports, particularly textiles and clothing, can enter the European Union market at reduced or zero tariffs. Pakistan has benefited from the scheme since 2014, and the European Union remains a large market for Pakistani textile and apparel exports. In the 2025-26 fiscal year, the EU-27 remained Pakistan’s largest market for textile and apparel exports, absorbing goods worth 7.103 billion dollars, or 39.5 percent of total sector exports of 18.004 billion dollars. That share shows why a dip in Europe matters so much.
The fall was not even across Europe. Exports to western Europe, which includes countries such as Germany, the Netherlands, France, Italy and Belgium, account for the largest share of Pakistan’s exports to the European Union, but exports to this region shrank 8.51 percent to 1.065 billion dollars in the first quarter, from 1.164 billion dollars in the same period last year. Exports to Germany dipped 12.77 percent to 389.116 million dollars, from 446.100 million dollars, and exports to Italy declined 8.49 percent to 298.731 million dollars, from 326.460 million dollars.
Exports to eastern Europe fell more sharply, down 15.05 percent to 168.761 million dollars, from 198.677 million dollars. By contrast, exports to northern Europe increased by 21.07 percent to 236.321 million dollars, from 195.191 million dollars a year ago, and exports to southern Europe grew 5.26 percent to 879.896 million dollars, from 835.862 million dollars. That mixed picture shows that the problem is not the same in every market, and that some buyers in Europe are still buying more Pakistani goods, even as others buy less.
Trade data also showed that exports to the United Kingdom increased by 6.64 percent to 612.305 million dollars in the first quarter, compared with 574.171 million dollars a year earlier. The United Kingdom is not part of the European Union, and it has its own trading scheme for developing countries, so its rise does not change the European Union picture, but it does show that Pakistani exporters can still grow in some markets when conditions are right.
One reason given for the fall is the ongoing conflict in the Middle East, which has accelerated the decline in exports to European markets. Conflict can affect shipping routes, raise freight costs, and make buyers more cautious about placing large orders. Another challenge is the European Union’s preferential market access offered to India, one of Pakistan’s key competitors in textiles. When a competitor gets similar or better access, Pakistani exporters must compete harder on price, quality and delivery times.
Textile exports are at the centre of this story, and textile exports matter here, because textiles and clothing make up the bulk of Pakistan’s exports to Europe. In the first quarter, shipments to the European Union increased by 3 percent to 1.954 billion dollars for textile and apparel exports, according to the Pakistan Textile Council, compared with 1.897 billion dollars in the same period last year. That figure covers the European Union only, and it sits alongside the wider European total, which includes other European countries. The difference between the two measures is a reminder that trade data can be read in different ways, depending on which countries are included.
The future of GSP Plus is also in focus. Pakistan’s existing GSP Plus status will remain valid until 31 December 2028, the Minister of State for Finance, Bilal Azhar Kayani, told the National Assembly Standing Committee on Finance. Under the European Union’s revised GSP framework, approved in 2026, Pakistan must seek continued GSP Plus benefits beyond that date, rather than relying on its existing beneficiary status. To continue benefiting from 1 January 2029, Pakistan must submit a written request before the deadline, with information on the ratification of relevant international conventions and a credible plan of action.
The stakes are significant. The European Union’s 2026 assessment says Pakistan exported 7.5 billion euros in GSP Plus eligible goods to the bloc in 2024 and received an estimated 732 million euros in tariff exemptions. Losing that access, or facing tougher conditions, would raise costs for exporters and make Pakistani goods more expensive in Europe. The Pakistan Textile Council has urged the Prime Minister to direct all relevant ministries to take immediate measures to secure Pakistan’s GSP Plus status under the new scheme.
For workers in textile factories, the export numbers are not abstract. When orders fall, factories may cut shifts, delay hiring, or ask workers to wait for work. When orders rise, factories hire, pay overtime, and buy more cotton and other inputs. The fall in exports to Europe therefore matters for families in Faisalabad, Karachi, Lahore and other textile centres, as well as for the national economy. A small percentage fall in exports can mean a large change in factory life.
In the coming months, the items to watch will be whether exports to western Europe recover, whether the government moves quickly on the fresh GSP Plus application, and whether textile exporters can win back orders in Germany and Italy. The first quarter dip is modest in percentage terms, but it comes at a time when Pakistan needs every dollar of export earnings, and it shows that preferential access alone is not enough to guarantee growth.
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