Pakistan’s Foreign Direct Investment (FDI) declined 22% year-on-year to $364.3 million during the first two months of fiscal year 2026, the State Bank of Pakistan (SBP) reported on Thursday.
Gross FDI inflows dropped 16% to $560 million, while outflows slightly decreased by 2% to $196 million. On a monthly basis, the decline was sharper in August 2025, with FDI falling 43% to $156 million compared to $272.4 million in August 2024. In contrast, July showed a 7% year-on-year increase, with inflows reaching $208 million.
China remained the largest contributor to Pakistan’s Foreign Direct Investment, injecting $120 million in July–August FY26. However, this was less than half of the $254 million recorded in the same period last year. Hong Kong was the second-largest investor, contributing $60 million, down from $86 million in the previous year.
Foreign portfolio investment also faced net outflows of $75 million in the two-month period, compared to inflows of $25 million in July–August FY25.
Overall, Pakistan’s total net foreign investment, which includes Foreign Direct Investment, portfolio investment, and foreign public investment, fell 51% year-on-year to $278 million. This is a significant drop from $570 million recorded in the same period last fiscal year.
The decrease in Foreign Direct Investment and total foreign inflows raises concerns about investor confidence and economic stability in Pakistan. Analysts point to regional uncertainties and global economic trends as key factors influencing the slowdown.
Experts emphasize that policy reforms, improved business conditions, and incentives for foreign investors are critical to reviving investment levels in the coming months.
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