Foreign direct investment (FDI) in Pakistan experienced a significant decline of 45% year-on-year, dropping to $95 million in February, as reported by the State Bank on Monday. This sharp decrease highlights ongoing challenges in attracting foreign capital.
Despite the February downturn, the overall FDI for the fiscal year 2025, covering the period from July to February, showed a remarkable increase of 41%. Total inflows reached $1.618 billion, up from $1.147 billion during the same period last year.
The Pakistani government is actively working to attract foreign investments, yet rising terrorism and security concerns are negatively impacting the country’s image and deterring potential investors. Economic experts caution that, amid the current climate of uncertainty, significant increases in FDI may be unlikely.
Pakistan’s FDI levels remain considerably lower than those of its regional counterparts, and ongoing economic and political instability continues to obstruct efforts to privatize loss-making state-owned enterprises.
China remains the largest investor in Pakistan, contributing $662 million of the total $1.6 billion in FDI during the first eight months of fiscal year 2025. Other notable investors include Hong Kong, with $160 million, the United Kingdom at $167 million, and the United States, which contributed $68 million.
