Key Takeaways
- Foreign Direct Investment (FDI) in Pakistan declined sharply by 34 percent during the last fiscal year.
- The State Bank of Pakistan reported FDI worth USD 1.637 billion in FY26, down from USD 2.477 billion in FY25.
- Total foreign investment, including FDI and portfolio investment, fell by 74 percent to USD 451 million in FY26.
Foreign Direct Investment (FDI) in Pakistan experienced a significant decline during the fiscal year 2025-2026, according to the State Bank of Pakistan. The bank reported that FDI fell by 34 percent compared to the previous fiscal year, with an inflow worth USD 1.637 billion, down from USD 2.477 billion in FY25.
The total foreign investment, which includes FDI and portfolio investment, also saw a substantial decrease of 74 percent during this period, standing at USD 451 million compared to USD 1.746 billion in the previous fiscal year (FY25).
Breaking down the figures further, gross FDI inflows were recorded at USD 3.568 billion, while outflows amounted to USD 1.931 billion during FY26. This resulted in a net portfolio investment of negative USD 595 million for the year.
The decline was particularly pronounced on a month-on-month basis, with FDI falling to USD 130 million in June 2026 compared to USD 210 million in June 2025. This trend indicates a continued downward pressure on foreign investment inflows into Pakistan’s economy.
The State Bank of Pakistan highlighted that the decrease in FDI and total foreign investment could be attributed to various factors, including global economic uncertainties, geopolitical tensions, and domestic policy challenges. These factors have collectively contributed to a less favorable environment for foreign investors.
Experts suggest that such a decline may impact Pakistan’s ability to attract much-needed capital for infrastructure development, technology adoption, and job creation. However, the government is reportedly exploring various strategies to boost investor confidence and improve the investment climate in the country.
Despite the challenges, the State Bank of Pakistan remains optimistic about future prospects. The bank has outlined several initiatives aimed at enhancing the ease of doing business and creating a more attractive environment for foreign investors. These include streamlining regulatory processes, improving transparency, and promoting sectors with high growth potential.
