Pakistan’s Foreign Direct Investment Falls Sharply to $981 Million, Pressuring Economy

Pakistan has seen a significant drop in foreign direct investment (FDI) during the first seven months of the current fiscal year (July 2025–January 2026), official data shows.

According to the State Bank of Pakistan, net FDI inflows fell by about 41 percent compared with the same period last year, signaling weakening investor confidence.

Total FDI reached roughly $981 million in the seven months, down from about $1.66 billion in the previous fiscal year. Experts say this decline reflects global economic uncertainties, domestic policy challenges, and slower capital formation in key sectors like energy, technology, and manufacturing.

At the same time, profit and dividend repatriation by foreign companies operating in Pakistan increased. Repatriation reached around $1.68 billion over the same period, a rise of roughly 26 percent, which adds pressure on the country’s balance of payments.

Analysts note that Pakistan’s investment-to-GDP ratio has remained low, at around 13.8 percent, trailing regional economies such as Bangladesh and India. A low investment rate can limit long-term growth, job creation, and productivity improvements.

Foreign investment remains concentrated in a few countries, with China continuing as a leading source, although inflows from major partners are lower than last year. Sector diversification is also limited, making the economy’s foreign capital profile fragile.

Policy makers say boosting investor confidence will require clearer regulations, improved security of investment, and incentives that match those offered by regional competitors. Encouraging broader FDI could help support growth, expand industry, and strengthen foreign exchange reserves.

FDI Key Stats (Jul 2025–Jan 2026)