FDI surges to $167m in March

KARACHI: Foreign direct investment (FDI) into Pakistan climbed sharply in March, even though overall inflows for the first nine months of FY26 remained well below the level recorded a year earlier, according to data released by the State Bank of Pakistan on Thursday.

The central bank’s figures showed Pakistan received $167 million in FDI in March, up from $63m in the same month last year. That represented an increase of $104m, or 165 per cent.

Despite the month-on-month improvement, cumulative inflows during July-March FY26 fell to $1,354m, compared with $1,856m in the corresponding period of the previous year, marking a decline of 27pc.

Pakistan has remained largely outside the focus of foreign investors for more than a decade, while domestic political and economic uncertainty has also contributed to weak inflows.

China and Hong Kong remained the biggest contributors

A large share of the March inflows came from a small number of countries. China remained the leading investor, a position it has held for years.

Out of the total $167m received in March, China and Hong Kong together accounted for $78m. Of that amount, China contributed $43m and Hong Kong $35m.

For the July-March FY26 period, inflows from China stood at $678.6m, while Hong Kong contributed $253m. Combined, the two accounted for $928m out of the total $1.354bn received during the nine-month period.

Other notable inflows during July-March FY26 included $144m from the United Arab Emirates, $153m from Switzerland, $88m from the United Kingdom and $66m from Japan.

Analysts remain cautious

Moreover, financial experts tracking the ceasefire in the Gulf after 40 days of war were not expecting a major improvement in FDI inflows. “Last month’s outflow was largely driven by foreign investors reducing exposure to higher-risk assets, particularly bonds, as Pakistan’s credit default swap widened by around 200bps. That pressure has eased this month as market sentiment has improved. However, long-term FDI remains weak, indicating investors are still cautious about Pakistan’s outlook,” said Komal Mansoor, head of research at Tresmark as quoted by Dawn.

Most financial experts were not optimistic about the outlook for future FDI, saying the situation in the Gulf remained uncertain despite the ceasefire.

The latest figures therefore point to a mixed picture: a strong rise in inflows in March, but a sizeable contraction over the broader July-March period of FY26.