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Pakistan’s foreign direct investment fell sharply in the first four months of FY26, signaling investor caution despite an improvement in October’s inflows.
Foreign Direct Investment (FDI) dropped to $748 million from July to October FY2025-26, down 26% compared to $1.01 billion in the same period last year. The decline highlights ongoing economic uncertainty, although officials note that inflows in October alone showed a positive turnaround.
In October 2025, Pakistan received $179 million in FDI, a 23% increase from October 2024. Outflows also dropped significantly to $139 million, compared to $193 million last year, indicating some stability.
China remained the leading investor with $38 million, followed by the UAE at $36 million, Hong Kong at $24 million, and Switzerland at $17 million. The Financial Business sector attracted the highest investment at $80 million, with the power sector receiving $53 million, showing sustained interest in core economic areas.
Officials say the mixed trend overall decline but monthly improvement reflects a gradual return of investor confidence, influenced by easing political uncertainty and ongoing economic reforms. However, analysts warn that Pakistan must ensure policy stability and strengthen regulatory frameworks to sustain long-term foreign investment.
