Karachi, February 17, 2026 – Pakistan witnessed a sharp decline in foreign direct investment (FDI), with inflows plunging by 41% during the first seven months (July to January) of fiscal year 2025-26, according to the State Bank of Pakistan (SBP) on Tuesday.
FDI inflows dropped to $981 million in the current fiscal year, down from $1.66 billion in the corresponding period of FY25. The portfolio investment in Pakistan’s capital market also saw a net outflow of $288 million, compared with an outflow of $232 million last year, highlighting cautious sentiment among foreign investors.
Overall, total private foreign investment fell to $694 million, a sharp decrease from $1.43 billion during the same period in the previous fiscal year. Meanwhile, foreign public investment turned negative, with an outflow of $176 million, contrasting with an inflow of $55 million in FY25.
As a result, the net inflow of foreign investment into Pakistan declined significantly to $517 million, compared with $1.48 billion during July to January of the previous fiscal year.
Economists attribute the slowdown in foreign investment to ongoing economic uncertainty, currency volatility, and concerns over regulatory policies. Analysts suggest that improving investor confidence through reforms, incentives, and political stability will be crucial for attracting foreign capital in the remaining months of FY26.
The decline in FDI and foreign investment highlights challenges for Pakistan’s economic growth, emphasizing the need for strategic measures to boost investor confidence and strengthen the country’s financial inflows.