Pakistan’s foreign direct investment drops 26% in four months of FY26

Foreign direct investment in Pakistan fell 26% in the first four months of the current fiscal year, deepening concerns over the country’s ability to attract foreign capital amid persistent economic pressures.

Data released by the State Bank of Pakistan shows the country drew $747.7 million in FDI from July to October FY26, down from $1.010 billion in the same period a year earlier, a decline of $263 million. Total FDI inflows were recorded at $1.203 billion, while outflows reached $456 million.

Portfolio investment also deteriorated, posting a net outflow of $160 million, compared with a $97 million outflow during the same period in FY25. Foreign public investment saw an even steeper drop, falling $379 million, after registering an inflow of $283 million a year earlier.

Overall foreign investment — a combination of FDI, portfolio flows and public investment — plunged 82.5%, dropping to $209.2 million from $1.196 billion in the comparable period last year.

Despite the bleak four-month trend, monthly data for October offered a rare bright spot. FDI in October rose 22.6% year-over-year, reaching $179 million, buoyed largely by slower outflows.

Outflows for the month totaled $139 million, compared with inflows of $318 million.

Economists say the figures highlight Pakistan’s struggle to restore investor confidence. Steady foreign inflows, they argue, are critical for a cash-strapped economy working to stabilize its external account and rebuild foreign exchange reserves.

“These numbers underscore a structural challenge,” said independent economic analyst. “One strong month doesn’t reverse the broader trend. Pakistan needs regulatory certainty, political stability and a clearer investment strategy if it wants to pull in durable foreign capital. Without that, the pressure on external financing will persist.”