- Pakistan’s exports reached $734 million in 2025, while Saudi Arabia’s imports totaled $4.47bn
As Saudi Arabia commemorates its National Day on September 23, 2025, marking the unification of the Kingdom under King Abdulaziz Al Saud in 1932, this occasion provides a profound opportunity to assess the multifaceted economic partnership between the Kingdom of Saudi Arabia and the Islamic Republic of Pakistan. This alliance is deeply rooted in shared Islamic values, cultural affinities, and strategic imperatives that have fostered resilience amid regional complexities. The National Day celebrations, characterized by reflections on national achievements and future aspirations, align seamlessly with the evolving dynamics of bilateral trade, which have gained renewed momentum through recent diplomatic engagements.
By September 18, 2025, bilateral trade has exhibited substantial growth, propelled by a series of agreements that underscore mutual commitments to economic diversification and stability. Historically, the trade balance has favored Saudi Arabia, primarily due to Pakistan’s substantial imports of petroleum products, which constitute a critical component of its energy security framework. However, emerging trends indicate a strategic pivot, with Pakistan enhancing its exports in sectors such as information technology, agriculture, and skilled services. This shift is emblematic of broader efforts to achieve equilibrium, supported by Saudi investments that align with Vision 2030’s objectives.
The significance of this partnership extends beyond mere transactional exchanges; it encompasses remittances from the Pakistani diaspora in Saudi Arabia, joint ventures in infrastructure, and collaborative initiatives in renewable energy. Recent developments, including the signing of the Strategic Mutual Defense Agreement on September 17, 2025, have injected fresh vigor into economic ties, as security assurances often pave the way for enhanced investor confidence and trade facilitation. This agreement, which stipulates that any aggression against one nation shall be considered an attack on both, not only fortifies military cooperation but also indirectly bolsters economic interdependence by mitigating geopolitical risks.
This comprehensive article delves into the historical evolution of these relations, current trade statistics with detailed sectoral analyses, key agreements and their implications, the transformative impact of Saudi Vision 2030, notable developments in 2025, persistent challenges, and promising future prospects. Through this exploration, it becomes evident that the Pakistan-Saudi Arabia trade relationship is a cornerstone of regional economic architecture, contributing to prosperity and stability in alignment with the unifying ethos of Saudi National Day.
Historical Overview
The trade relations between Pakistan and Saudi Arabia have a rich historical tapestry, beginning with Pakistan’s emergence as an independent nation in 1947. From the outset, the two countries were bound by profound religious and cultural ties, with Saudi Arabia serving as the custodian of Islam’s holiest sites, which resonated deeply with Pakistan’s Muslim-majority population. Formal diplomatic relations were established in 1951, setting the stage for initial economic interactions focused on essential commodities.
In the early years, trade was modest but strategic. Saudi Arabia exported crude oil to fuel Pakistan’s nascent industrial sector, while Pakistan reciprocated with agricultural products like rice and textiles, leveraging its fertile lands and manufacturing capabilities. The 1960s witnessed an intensification of these exchanges, particularly during periods of global oil price volatility, where Saudi Arabia’s role as a reliable supplier became indispensable for Pakistan’s energy needs.
The oil boom of the 1970s marked a pivotal era, catalyzing large-scale Pakistani labor migration to the Kingdom. This period saw millions of Pakistanis contributing to Saudi infrastructure projects, including the expansion of holy sites and urban development. Remittances from this workforce emerged as a vital economic lifeline for Pakistan, averaging billions annually and supporting foreign exchange reserves. The 1982 Economic and Technical Cooperation Agreement formalized these ties, promoting joint ventures in energy, construction, and agriculture.
The 1980s and 1990s further deepened the partnership amid regional challenges, such as the Soviet-Afghan War and the Gulf War. Saudi Arabia provided substantial financial aid to Pakistan, including grants and deferred oil payments, which helped stabilize Pakistan’s economy during crises. By the mid-1990s, bilateral trade volumes approached $1 billion annually, bolstered by Saudi investments in Pakistani refineries, such as the establishment of the Pakistan Refinery Limited with Saudi technical assistance. Additionally, military training programs and defense collaborations began to intertwine with economic relations, as Pakistan trained Saudi personnel, fostering trust and interoperability.
The turn of the millennium introduced new dimensions, influenced by global events like the 2001 terrorist attacks and the subsequent War on Terror. Saudi Arabia extended economic support during Pakistan’s 2008 financial downturn, offering deferred oil payments valued at over $1 billion. The establishment of the Saudi-Pakistani Joint Ministerial Commission in 2010 institutionalized oversight of trade and investment, leading to agreements on manpower export and technical cooperation. Trade volumes during the 2010s averaged $3–4 billion per year, with oil imports dominating, but diversification efforts began to take root through initiatives like the Saudi Fund for Development’s financing of Pakistani hydropower projects.
In the lead-up to 2025, historical patterns have evolved toward greater strategic alignment. The $3 billion deposit by Saudi Arabia into Pakistan’s central bank in 2018 exemplified crisis support, while ongoing collaborations under the China-Pakistan Economic Corridor (CPEC) have attracted Saudi interest, with pledges for investments in Gwadar Port and energy infrastructure. This historical continuum underscores a relationship that has transitioned from aid-dependent to partnership-oriented, laying a robust foundation for contemporary advancements.
Evolution of Labor and Remittance Flows
A critical aspect of the historical overview is the role of labor migration and remittances. Since the 1970s, over 2.5 million Pakistanis have resided in Saudi Arabia, contributing to sectors like construction, healthcare, and engineering. This diaspora has not only facilitated knowledge transfer but also generated remittances that peaked at $7.5 billion in 2024, representing a significant portion of Pakistan’s total inflows. Historical data from the State Bank of Pakistan indicates that these flows have grown at an average annual rate of 8% over the past two decades, mitigating balance-of-payments pressures and supporting domestic consumption.
Impact of Geopolitical Events
Geopolitical events have profoundly shaped trade relations. During the 1991 Gulf War, Pakistan’s support for the Saudi-led coalition strengthened bonds, leading to increased trade concessions. Similarly, post-9/11 collaborations in counterterrorism enhanced economic ties, with Saudi Arabia providing educational scholarships and infrastructure grants. These events highlight how security considerations have historically intertwined with trade, a pattern that persists today.
Current Trade Statistics
As of September 2025, the bilateral trade landscape between Pakistan and Saudi Arabia demonstrates resilience and growth, though characterized by a structural imbalance. Comprehensive data from official sources and international observatories provide a detailed snapshot.
Pakistan’s exports to Saudi Arabia in February 2025 totaled SAR 247 million (approximately $66 million), registering a 5.11% year-on-year increase. For the fiscal year 2024–25, projections estimate exports at $734 million, with key sectors including:
- Agriculture: Rice exports, particularly basmati varieties, dominate, valued at over $300 million annually, driven by Saudi demand for premium grains.
- Textiles and Garments: Contributing $200 million, benefiting from Pakistan’s cost-competitive production.
- Processed Foods and Leather Goods: Adding $100 million, with growth in halal-certified products.
- Information Technology and Services: Emerging at $50 million, with potential to double by year-end.
Exports from July to October 2024 surged 22%, reaching $245.56 million, fueled by non-traditional sectors like software development and engineering services.
Saudi Arabia’s exports to Pakistan in February 2025 amounted to SAR 1.31 billion ($349 million), a 79% rise from the previous year. In 2024, imports totaled $4.47 billion, primarily comprising:
- Petroleum Products: Crude oil and refined fuels, accounting for 70% or $3.13 billion.
- Petrochemicals and Plastics: Valued at $800 million, supporting Pakistan’s manufacturing.
- Fertilizers and Chemicals: $500 million, aiding agriculture.
This results in an annual trade deficit for Pakistan of $300–400 million, though narrowing due to export growth.
Remittances remain pivotal. In August 2025, inflows from Saudi Arabia reached $736.7 million, the highest single-source contribution, propelling Pakistan toward $38.3 billion in total remittances for the fiscal year. Year-on-year, remittances grew 15%, underscoring the human capital dimension.
| Sector | Pakistan Exports (2024, $M) | Saudi Exports (2024, $M) | Growth Rate (YoY) |
|---|---|---|---|
| Petroleum | 0 | 3130 | +10% |
| Agriculture/Rice | 300 | 0 | +12% |
| Textiles | 200 | 0 | +8% |
| Petrochemicals | 0 | 800 | +15% |
| IT/Services | 50 | 0 | +50% |
| Others | 184 | 540 | +5% |
This table illustrates sectoral contributions, highlighting diversification opportunities.
Key Agreements and Pacts
The bilateral trade framework is anchored in a series of agreements that have progressively addressed economic, technical, and security dimensions.
The 1982 Economic and Technical Cooperation Agreement initiated joint ventures, focusing on energy and infrastructure. The 2006 Avoidance of Double Taxation Agreement reduced fiscal barriers, encouraging investments.
The Saudi-Pakistani Joint Ministerial Commission, reconvened in 2023, has identified synergies in agriculture and IT. The 2023 MoU on Manpower Export streamlined worker placements, addressing visa challenges.
In 2024, an IT-focused agreement aimed to double exports from $50 million to $100 million, establishing dedicated support mechanisms.
The landmark Strategic Mutual Defense Agreement of September 17, 2025, while security-centric, has economic ramifications by enhancing stability for trade routes and investments, particularly in CPEC projects. Analysts view this as a catalyst for $25 billion in Saudi commitments across energy and mining.
These pacts collectively target $10 billion in trade by 2030, emphasizing diversification.
Sub-Section: Implications of the 2025 Defense Pact
The defense pact formalizes long-standing ties, potentially unlocking deferred oil facilities and joint economic zones, while mitigating risks from regional conflicts.
Impact of Saudi Vision 2030
Launched in 2016, Saudi Vision 2030 seeks to diversify the Kingdom’s economy, profoundly influencing Pakistan-Saudi relations.
Labor mobility is central: 2.5 million Pakistanis support projects like NEOM, generating $7 billion in remittances.
Trade diversification sees Pakistani rice and fruits aiding Saudi food security, while IT exports align with digital goals.
Investments via the Public Investment Fund reached $25 billion in 2024, targeting renewables and mining. Pakistan’s solar expertise complements the Green Saudi Initiative.
Reforms under Pakistan’s Special Investment Facilitation Council have boosted exports by 22%.
Sub-Section: Sector-Specific Opportunities
In tourism, Pakistan can supply skilled hospitality workers; in renewables, joint solar farms are viable.
Recent Developments in 2025
2025 has been transformative. Prime Minister Shehbaz Sharif’s March visit to Jeddah yielded MoUs in agriculture and technology.
IT exports are set to double to $100 million. Al Baik’s entry into Pakistan fosters market integration.
The September 17 defense pact enhances economic confidence, attracting investments. Record remittances and improved connectivity underscore progress.
Sub-Section: Economic Ramifications of the Pact
The pact could facilitate $2 billion in infrastructure investments, stabilizing markets.
Challenges
Challenges include trade imbalances from oil dependency, non-tariff barriers like quality standards, and the absence of an FTA.
Geopolitical risks, visa delays, and competition from India ($41.88 billion trade) persist. Domestic issues in Pakistan, such as bureaucracy, hinder progress.
Sub-Section: Geopolitical Hurdles
Regional instability and shifting alliances complicate supply chains.
Future Prospects
Prospects are optimistic, with trade projected at $10 billion by 2030. Opportunities in IT, renewables, and pharmaceuticals could attract $20 billion in investments. An FTA, vocational training, and joint R&D are recommended for sustained growth, positioning the partnership as a South-South model. Optimistic scenarios include integrated economic zones; challenges may arise from global oil shifts.
The author, Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger, and motivational speaker. He writes articles on diversified topics. He can be reached at sir.nazir.shaikh@gmail.com