KARACHI: The State Bank of Pakistan (SBP) reported a sharp decline in foreign direct investment (FDI), which fell by 43% during the first half (July–December) of fiscal year 2025-26 compared with the same period last year. FDI totaled $808 million in 1HFY26, down from $1.42 billion in 1HFY25, signaling a slowdown in investor confidence despite a strong performance in the country’s stock market.
The capital market witnessed a modest outflow of $225 million during the first half of the current fiscal year, slightly higher than the $222 million outflow recorded in the same period of FY25.
Private foreign investment also contracted significantly, dropping to $583 million from $1.20 billion last year. Meanwhile, portfolio investment under foreign public investment saw a sharp outflow of $376 million, in contrast to an inflow of $140 million in the corresponding period of the previous fiscal year.
Overall, total foreign investment, combining both private and public inflows, reached only $207 million during July–December 2025-26, compared with $1.34 billion in 1HFY25.
Economists warn that if foreign investment continues to decline, Pakistan could face challenges in sustaining economic growth and maintaining foreign exchange reserves. The SBP emphasized the need for structural reforms and policy measures to attract foreign investors and improve confidence in both the FDI and portfolio investment segments.
