SBP data shows sharp drop in foreign investment despite easing portfolio outflows
State Bank of Pakistan (SBP) reported on Monday that foreign direct investment (FDI) into Pakistan fell 31% during the first 10 months of fiscal year 2025-26, reflecting continued pressure on external investment inflows.
According to the central bank’s latest balance of payments data, FDI declined to $1.41 billion in July–April 2025-26, compared with $2.04 billion in the same period of the previous fiscal year.
Foreign investment inflows weaken
Total foreign private investment also dropped sharply to $859 million during the 10-month period, down from $1.75 billion a year earlier.
At the same time, foreign public investment recorded a net outflow of $828 million, compared with an outflow of $286 million in the corresponding period last year.
As a result, net foreign investment inflows—covering both private and public flows—stood at just $32 million, significantly lower than $1.46 billion in the same period of the previous fiscal year.
Portfolio flows show some improvement
The report showed some easing in portfolio investment outflows, which stood at $290 million during the first 10 months of FY26 compared with $550 million in the same period last year.
Analysts said reduced capital market volatility helped slow the pace of foreign portfolio exits, although overall investor sentiment remained cautious.
Investment outlook remains fragile
Economists noted that the sharp decline in FDI reflects ongoing macroeconomic challenges, policy uncertainty and global financial tightening, which continue to weigh on long-term investment commitments.
They added that improving investor confidence, ensuring policy stability and strengthening macroeconomic fundamentals will be key to reversing the downward trend in foreign inflows.