Foreign direct investment in Pakistan dives 34% to $568.8mn in FY26’s Q1
KARACHI: Foreign direct investment (FDI) in Pakistan dropped 34 percent in the first quarter of this fiscal year (FY26), the State Bank of Pakistan (SBP) reported on Monday.
Pakistan fetched FDI amounting to USD 568.8 million during July-September of the current fiscal year, compared with USD 864.6 million in the same period last year, depicting an increase of USD 296 million.
During the quarter, total FDI inflows amounted to USD 886 million down from USD 1.315 billion in same quarter of last year, reflecting continued investor caution amid global and domestic economic challenges. The decline indicates that investor confidence remains subdued despite recent signs of macroeconomic stabilization.
Portfolio investment also showed weakness, posting net outflows of USD 121.5 million in the first quarter. Analysts attribute this to profit-taking by foreign investors and limited activity in Pakistan’s equity and debt markets. As a result, the country’s net foreign investment turned negative, standing at USD 64.5 million during July-September FY26, compared with a net investment of USD 997 million in the same period last fiscal year.
Month-on-month basis, FDI in Pakistan was USD 185.6 million in September 2025 compared to USD 417.4 million in September 2024.
Economic observers note that while Pakistan’s external position has improved due to a narrower current account deficit and stronger remittance inflows, sluggish FDI and portfolio investment underscore the need for policy consistency, improved business climate, and political stability to attract long-term capital.
Copyright Business Recorder, 2025
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