Pakistan recorded a 34% decline in foreign direct investment (FDI) during the first quarter of the ongoing fiscal year (FY26).
According to a report by the State Bank of Pakistan released on Monday, FDI in Pakistan stood at $568.8 million during July to September, which is $296 million less compared to $864.6 million during the same period of the previous fiscal year.
The total FDI inflows during the current quarter amounted to $886 million, compared to $1.315 billion during the same period last year. This decline reflects that investor confidence remains weak due to global and domestic economic challenges, despite some signs of stabilization in the economy in recent months.
Portfolio investment also remained weak, with net outflows of $121.5 million recorded during the first quarter. According to experts, this trend is the result of foreign investors taking profits and limited activity in Pakistan’s equity and debt markets. As a result, net foreign investment in the country turned negative, recorded at negative $64.5 million during July to September of FY26, compared to $997 million in the same period of the previous year.
On a monthly basis, FDI in Pakistan was $185.6 million in September 2025, showing a significant decline compared to $417.4 million in September 2024.
Economists say that although Pakistan’s external financial position has somewhat improved due to a reduction in the current account deficit and better remittance inflows, the slowdown in FDI and portfolio investment indicates a strong need for policy continuity, an improved business environment, and political stability to promote long-term investment.
