Foreign direct investment in Pakistan declines by 33% in July-February period

KARACHI: Foreign direct investment (FDI) in Pakistan recorded a significant drop of 33 percent during the first eight months of the current fiscal year (FY26), according to data released by the State Bank of Pakistan. Total FDI inflows stood at $1.195 billion from July to February, compared to $1.793 billion in the same period of the previous fiscal year. This marks a decrease of $598 million, or 33.3 percent.

The data indicates that the majority of FDI during this period originated from China. In February alone, FDI reached $213 million, with $140 million—equivalent to 66 percent—coming from Chinese investors.

The State Bank’s figures reflect the situation prior to the onset of the Gulf war, which began on February 28. While Pakistan is not directly involved in the conflict, economic repercussions have already started to impact the country. The 33 percent decline in FDI, which occurred before the war began, has been described as disappointing for the government, which has been actively seeking to attract substantial foreign investment across various sectors, including industry, agriculture, and services.

Officials have noted that the State Bank’s data does not account for any potential impact from the ongoing conflict, and the full extent of the war’s effect on foreign investment in Pakistan remains to be seen.

China’s continued dominance in FDI inflows underscores the country’s significant role in Pakistan’s investment landscape. Despite efforts to diversify sources of foreign investment, Chinese capital remains the main contributor to Pakistan’s FDI figures during the period under review.