Foreign investment in Pakistan declines 36.5% in May

Foreign direct investment (FDI) in Pakistan dropped 36.5% in May to $193.9 million, down from $305.6 million in the same month last year, according to central bank data.

For the first 11 months of the fiscal year, total FDI fell 7.6% to $1.97 billion, compared with $2.14 billion the previous year.

The finance sector received the highest inflows at $53.8 million, followed by mining and quarrying at $53.4 million, power generation at $39.6 million, and the oil and gas sector at $23.3 million.

China remained the largest investor in April, contributing a net $79.2 million, followed by the United Kingdom at $19.3 million and Hong Kong at $17.9 million.

Pakistan recorded a net FDI inflow of $1.62 billion in fiscal year 2022-23, which increased to $2.34 billion in FY24. In FY25 so far, FDI has reached $1.97 billion.

Last month, Pakistan’s Finance Minister Muhammad Aurangzeb and Prime Minister’s Adviser on Privatization Muhammad Ali visited London for a two-day trip to engage top international financial institutions. The government aims to attract foreign investment through structural reforms and improved macroeconomic stability.

Officials hope opening key sectors to foreign investors will spur economic growth, create jobs and foster innovation.

Foreign direct investment is a major driver of capital formation worldwide, particularly in developing countries like Pakistan. It plays a critical role in economic development when supported by sound policies and trade openness.