Pakistan’s Foreign Direct Investment (FDI) fell by 26% during the first four months of FY26, totaling $748 million compared to $1,011 million in the same period last year. The decline highlights ongoing challenges in attracting sustained foreign capital.
In October 2025, FDI inflows improved slightly, reaching $179 million, up 23% from $146 million in October 2024. Outflows during the month fell to $139 million, a 28% decrease compared to $193 million in the same month last year.
China led as the largest investor, contributing $38 million in FDI in October. Other top contributors included the UAE ($36 million), Hong Kong ($24 million), and Switzerland ($17 million). These inflows reflect continued investor interest in Pakistan despite short-term economic challenges.
Sector-wise, the financial and business sector attracted the most FDI, receiving $80 million in October. The power sector followed with $53 million, while personal services attracted $10 million. Analysts note that these sectors remain key drivers for foreign investment in Pakistan.
Experts say the overall FDI decline in the first four months of FY26 is linked to global economic uncertainties and cautious investor sentiment. However, October’s increase in inflows signals a positive shift and growing confidence from major investor countries.
The government has introduced measures to encourage Foreign Direct Investment, including regulatory reforms, investment incentives, and efforts to streamline procedures for foreign investors. Officials expect these steps to attract further FDI in strategic sectors.
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Despite the initial decline, analysts remain optimistic that Pakistan’s long-term investment potential will support growth in Foreign Direct Investment, especially in finance, power, technology, and services. The government aims to strengthen investor confidence and improve the overall business environment.
