The bilateral trade relations between Pakistan and the United Arab Emirates (UAE) represent a cornerstone of economic diplomacy in South Asia and the Gulf region. Rooted in shared cultural, religious, and historical ties, this partnership has evolved from fraternal bonds into a dynamic economic alliance that drives growth, investment, and regional connectivity. As of December 2025, the UAE stands as Pakistan’s third-largest trading partner, after China and the United States, with bilateral trade volumes surpassing $10 billion annually and poised for exponential growth. This relationship is not merely transactional; it embodies a strategic synergy where Pakistan’s vast human resources, agricultural prowess, and textile expertise complement the UAE’s role as a global trade hub, energy exporter, and financial powerhouse.
In an era marked by geopolitical shifts, supply chain disruptions, and the push toward sustainable development, Pak-UAE trade relations offer a model of resilience. The UAE’s investments in Pakistan exceed $10 billion over the past two decades, spanning sectors from infrastructure to telecommunications, while remittances from over 1.8 million Pakistani expatriates in the UAE bolster Pakistan’s foreign exchange reserves, reaching $6.7 billion in 2024 and projected to exceed $7 billion in 2025. This influx supports Pakistan’s macroeconomic stability, funding imports and development projects. Conversely, the UAE benefits from Pakistan’s affordable labor, raw materials, and strategic location as a gateway to Central Asia via the China-Pakistan Economic Corridor (CPEC).
The genesis of Pakistan-UAE relations predates the UAE’s formal establishment, reflecting a narrative of mutual support and shared Islamic heritage. Pakistan, having gained independence in 1947, was among the first nations to engage with the Trucial States (the precursor to the UAE) during the British colonial era. When the UAE federated on December 2, 1971, under the visionary leadership of Sheikh Zayed bin Sultan Al Nahyan, Pakistan extended immediate recognition—dispatching its ambassador just six months prior to formalization. This early gesture symbolized Pakistan’s role in the UAE’s nation-building, with Pakistani military advisors contributing to the formation of the UAE Armed Forces and civil servants aiding administrative setups.
The 1970s and 1980s laid the groundwork for economic ties amid the oil boom in the Gulf. Pakistani workers flocked to the UAE for construction and oil-related jobs, forming the bedrock of the expatriate community that now numbers 1.8 million. Remittances began flowing, providing a lifeline to Pakistan’s economy during periods of domestic instability. Diplomatically, high-level visits solidified bonds: In 1974, Pakistani Prime Minister Zulfikar Ali Bhutto visited Abu Dhabi, reciprocated by Sheikh Zayed’s trip to Islamabad in 1976. These exchanges emphasized cooperation in defense, education, and trade, with the UAE emerging as a key donor during Pakistan’s 1970s famines and floods.
The 1990s marked a shift toward formalized economic frameworks. Amid Pakistan’s structural adjustment programs under IMF oversight, the UAE became a pivotal investor. Bilateral agreements proliferated: The 1993 Agreement on Avoidance of Double Taxation and the Promotion and Protection of Investments Agreement fostered investor confidence. By 1995, a comprehensive Trade Agreement was inked, targeting textiles, rice, and leather exports from Pakistan in exchange for UAE petroleum products. This era also saw cultural exchanges, with the establishment of the Pakistan-UAE Friendship Association in 1998, promoting people-to-people ties.
Entering the 21st century, relations deepened amid regional turbulence. Post-9/11, both nations collaborated on counter-terrorism, signing an MoU in 2005 for intelligence sharing. Economically, the 2004 GCC-Pakistan Economic Cooperation Agreement integrated the UAE into broader Gulf trade dynamics, boosting non-oil exports. The 2008 global financial crisis tested resilience; the UAE provided $2 billion in balance-of-payments support to Pakistan, underscoring its role as a financial anchor. The 2010s witnessed transformative high-level engagements. Sheikh Khalifa bin Zayed Al Nahyan’s 2011 visit to Pakistan launched the UAE-Pakistan Assistance Program, a $450 million initiative for flood reconstruction in Khyber Pakhtunkhwa. In response, Pakistan supported UAE’s Yemen intervention with logistical aid. Trade volumes surged from $2.5 billion in 2010 to $8 billion by 2019, driven by Dubai’s Jebel Ali Port as a re-export hub for Pakistani goods to Africa and Europe.
Tensions briefly surfaced in 2014 when the UAE criticized Pakistan’s neutral stance on Yemen, leading to delayed oil supplies. However, relations rebounded swiftly. By 2019, under Sheikh Mohammed bin Zayed Al Nahyan’s presidency, the UAE pledged $3 billion in aid amid Pakistan’s economic woes, alongside investments in Gwadar Port under CPEC. The COVID-19 pandemic further tested bonds; the UAE donated 1 million vaccine doses and facilitated medical evacuations, while virtual trade forums sustained momentum. This historical trajectory, from diplomatic solidarity to economic interdependence—illustrates how Pak-UAE relations have weathered storms, emerging stronger. As Sheikh Mohammed bin Zayed noted during Prime Minister Imran Khan’s 2020 visit, “Our partnership is not just strategic; it is familial.” This foundation propels contemporary trade dynamics.
As of fiscal year 2024-25, Pak-UAE bilateral trade has reached unprecedented heights, totaling $10.1 billion—a 20.24% increase from $8.41 billion in goods trade the previous year. Including services, the figure climbs to $10.9 billion for 2023-24, with projections for $11.5 billion by end-2025. This growth trajectory reflects deliberate policy interventions, including the Special Investment Facilitation Council (SIFC), which has fast-tracked $3 billion in UAE-linked projects since 2023.
Pakistan’s exports to the UAE stood at $2.1 billion in FY25, up 41% from $1.59 billion in FY24, while imports totaled $8 billion, yielding a trade deficit of $5.9 billion—narrowed by 28% due to import declines in petroleum. Detailed breakdowns reveal asymmetry: UAE exports to Pakistan include crude oil ($2.5 billion), gold ($1.2 billion), and machinery ($800 million), comprising 70% of inflows. Pakistani shipments are diversified: Textiles and apparel ($800 million), rice and fruits ($500 million), leather goods ($300 million), and surgical instruments ($200 million).
| Year | Total Trade ($B) | Pakistan Exports ($B) | UAE Exports ($B) | Trade Balance ($B) |
|---|---|---|---|---|
| 2020 | 5.2 | 1.09 | 4.11 | -3.02 |
| 2021 | 6.8 | 1.17 | 5.63 | -4.46 |
| 2022 | 10.6 | 1.30 | 9.30 | -8.00 |
| 2023 | 10.9 | 1.76 | 9.14 | -7.38 |
| 2024 | 10.1 | 2.08 | 8.02 | -5.94 |
| 2025 Proj.) | 11.5 | 2.50 | 9.00 | -6.50 |
| *Sources: Trading Economics, State Bank of Pakistan (2025 data projected). | ||||
Services trade, at $2.56 billion in 2023-24, grew 20.54%, driven by IT outsourcing ($1 billion) and logistics ($800 million). From July 2024 to January 2025, goods trade rose 21.63%, with Pakistani exports up 7.53%.
Post-pandemic recovery accelerated trade: UAE’s non-oil trade with Pakistan hit $8.6 billion in 2024, fueled by Dubai’s Expo 2020 legacy and Pakistan’s SIFC incentives. Remittances, a trade enabler, surged 42% in 2024 to $6.7 billion, stabilizing Pakistan’s current account. E-commerce platforms like Daraz UAE have boosted small-parcel exports by 30%, while halal certification aligns Pakistani agro-products with UAE’s $50 billion market. Geopolitical stability post-2021 Yemen thaw has de-risked investments, with UAE FDI inflows to Pakistan reaching $2.5 billion in 2024. However, the deficit persists due to Pakistan’s energy dependence, importing 40% of its oil from the UAE. This landscape positions Pak-UAE trade as a growth engine, with potential to hit $20 billion by 2028 through diversification. Pak-UAE trade thrives on complementary strengths: Pakistan’s labor-intensive manufacturing and agriculture pair with UAE’s energy, logistics, and finance. Key sectors account for 85% of volumes.
Textiles dominate Pakistani exports at $800 million (38% of total), leveraging UAE’s re-export role to the Middle East and Africa. Bed linens, garments, and yarns from Faisalabad mills supply Dubai’s retail chains like Lulu Hypermarket. In 2024, value-added exports grew 25%, aided by GSP+ status under EU-UAE ties. UAE investments in Pakistan’s spinning units, like $500 million from Al-Futtaim Group, enhance quality control and sustainability, aligning with UAE’s green textile mandates. Challenges include competition from Bangladesh, but opportunities abound in eco-fabrics, with joint ventures targeting $1 billion by 2027.
Pakistan’s $500 million agro-exports, rice, fruits, dates, and meat—meet UAE’s import needs for 90% of its food. Basmati rice from Punjab dominates, while a 2025 MoU for three date processing plants in Balochistan aims to boost value addition, targeting $100 million in processed exports. UAE’s $200 million investment in Pakistani olive cultivation addresses its $300 million olive oil import bill. This sector exemplifies resilience: Post-2022 floods, UAE aid rebuilt irrigation, yielding 15% export growth in 2024. UAE supplies 40% of Pakistan’s crude oil ($2.5 billion), but reverse flows include refined petroleum products ($300 million). A $5 billion UAE refinery in Gwadar, announced in 2019, progresses under SIFC, processing Pakistani minerals like copper from Reko Diq. Renewable tie-ups, including solar farms, align with UAE’s net-zero goals.
IT services exports hit $1 billion in 2024, with Pakistani freelancers powering UAE’s fintech boom. UAE’s $2 billion PTCL stake facilitates data centers, while startups in Dubai Silicon Oasis collaborate on AI solutions. Remittances via digital wallets like JazzCash-UAE Pay grew 50%. UAE firms like DP World manage 85% of Karachi Port, with $102 million for wharves. The 2025 Karachi-Dushanbe convoy via Jebel Ali cut transit times to 16 days, unlocking Central Asian markets.
| Sector | Pakistan Exports ($M) | UAE Exports ($M) | Growth (2024-25) |
|---|---|---|---|
| Textiles | 800 | 100 | +25% |
| Agriculture | 500 | 50 | +15% |
| Energy | 300 | 2,500 | +10% |
| IT/Services | 1,000 | 500 | +30% |
| Logistics | 200 | 800 | +40% |
These sectors illustrate a balanced portfolio, with potential for $5 billion in new joint ventures. Over 28 agreements underpin Pak-UAE trade, evolving from bilateral pacts to regional integrations. The 1995 Trade Agreement eliminated tariffs on 1,000 items, boosting rice exports by 200% initially. The 1993 Investment Promotion Agreement safeguards FDI, underpinning $10 billion inflows. The 2024 $3 billion agreements cover railways (ML-1 upgradation), SEZs, and infrastructure, operationalizing SIFC. The Comprehensive Economic Partnership Agreement (CEPA) negotiations, targeting conclusion in 2025, promise zero tariffs on 90% goods, potentially doubling trade. Sector-specific MoUs include the 2025 date processing pact and 2024 GCC-Pakistan FTA preliminary, focusing on energy and halal trade. The Joint Business Council MoU enhances B2B linkages. These frameworks reduce barriers, with CEPA projected to add $4 billion in exports by 2030.
The 1.8 million Pakistani expatriates in the UAE are the unsung architects of trade relations, contributing $7 billion in remittances (projected 2025)—Pakistan’s second-largest source after Saudi Arabia. This diaspora, spanning blue-collar workers to C-suite executives, drives 20% of bilateral trade through informal networks and entrepreneurship. In Dubai’s construction sector, Pakistanis form 30% of the workforce, channeling skills back home via training programs. Entrepreneurs like those in Deira’s gold souk facilitate $1 billion in re-exports annually. Remittances fund SME expansions in Sialkot’s surgical industry, enhancing UAE-bound exports. Government initiatives, like the 2025 video guide for expatriates, promote legal channels, reducing hawala usage by 15%. The diaspora’s advocacy has secured visa relaxations, boosting tourism and trade fairs. This human capital multiplier effect amplifies economic ties, with potential for $10 billion remittances by 2030 through fintech integration.
UAE’s $10+ billion investments over two decades span 19 companies in Pakistan. Banking leads with Abu Dhabi Group’s acquisitions of Bank Alfalah and UBL ($1.5 billion), followed by telecom (Etisalat’s PTCL stake, $2 billion). Real estate features Emaar’s $500 million projects in Islamabad, while aviation ties via Emirates and Etihad enhance connectivity. Energy investments, like PARCO’s refinery, secure supplies. The 2025 IHC acquisition of First Women Bank signals renewed interest, with $10 billion pledged for minerals and renewables. These inflows create 100,000 jobs annually, per SIFC data. Reciprocal investments are nascent but growing: Pakistani firms eye UAE’s free zones via the BoI-IFZA MoU.
Despite momentum, hurdles persist. The $5.9 billion trade deficit strains Pakistan’s reserves, exacerbated by energy imports. Non-tariff barriers, like UAE’s 2023 meat import ban over health concerns, disrupted $100 million in exports. Logistical bottlenecks at Karachi Port delay 20% of shipments, while smuggling, gold and currency, drains $2 billion yearly. Regulatory divergences in standards and IP protection deter SMEs. Geopolitical frictions, though minimal, and Pakistan’s political volatility occasionally spook investors. Market intelligence gaps limit diversification; Pakistani exporters undervalue UAE’s demand for halal organics. Opportunities eclipse challenges. CEPA could slash tariffs, adding $4 billion in exports. Emerging sectors like fintech ($500 million potential) and AI leverage Pakistan’s 220 million population and UAE’s hubs. Green energy collaborations, targeting $2 billion in solar, align with COP28 commitments. E-commerce via UAE platforms could double SME exports to $1 billion. The Gwadar-Jebel Ali corridor positions Pakistan as a transit hub for $5 billion in Central Asian trade. By 2030, trade could reach $40 billion, per ambassadorial goals, through B2B councils and BRICS synergies. Sustainable practices, like circular textiles, will drive inclusive growth.
Pak-UAE trade relations epitomize a partnership where history informs ambition. From $10.1 billion in 2025 to a projected $40 billion horizon, this alliance promises shared prosperity. By navigating challenges with innovation and leveraging opportunities in emerging sectors, both nations can redefine regional economics. As Prime Minister Shehbaz Sharif affirmed in 2025, “Our ties are not just trade; they are a testament to enduring brotherhood.” The path forward demands bold policies, inclusive growth, and unwavering commitment—ensuring this strategic bond illuminates a brighter future for generations.
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