KARACHI: The State Bank of Pakistan (SBP) has reported a decline in Foreign Direct Investment (FDI) during the first 11 months (July–May) of the fiscal year 2024-25.
According to data released by the SBP, FDI fell by 7.6% to $1.98 billion, down from $2.14 billion recorded during the same period of the previous fiscal year.
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This decline in FDI reflects the broader trend of shrinking foreign interest in Pakistan’s economic environment amid persistent macroeconomic challenges. The SBP noted that the weakening investor sentiment, coupled with global economic uncertainty and domestic structural concerns, contributed to the downward trend in foreign inflows.
Moreover, foreign portfolio investment (FPI), another critical component of total foreign investment, registered a net outflow of $312.5 million during July–May FY25. This is in stark contrast to the net inflow of $115.4 million seen in the same months of FY24. The SBP attributed this reversal to heightened market volatility and concerns over returns in emerging markets, including Pakistan.
As a result of the FDI and FPI downturns, total foreign private investment decreased sharply by 26.2%, falling to $1.67 billion during the 11-month period under review, compared with $2.26 billion in the same timeframe of the previous fiscal year.
In addition, the SBP also reported a significant shift in foreign public investment trends. Investment in debt securities saw an outflow of $26.3 million during the current fiscal period, a major reversal from an inflow of $204.9 million recorded in the comparable period of FY24.
Combining foreign private and public investment, the SBP data showed that total foreign investment in Pakistan dropped by 14.4%, reaching only $1.35 billion during July–May FY25 compared with $1.52 billion in the same months last year.
In the entire fiscal year 2023-24, Pakistan had managed to attract $1.96 billion in total foreign investment. However, the continued decline in FDI, as highlighted by the SBP, signals the need for policy measures to restore investor confidence and improve the country’s external investment outlook.
