Islamabad, March 18: Foreign direct investment (FDI) in Pakistan saw a significant decline of 45% year-on-year, dropping to $95 million in February 2025, according to a report by the State Bank of Pakistan.
Despite the monthly dip, the overall FDI for the July–February FY25 period increased by 41%, totaling $1.618 billion, compared to $1.147 billion in the same period last year.
The Pakistani government has been actively working to attract foreign investment; however, growing concerns over terrorism have been tarnishing the country’s reputation and deterring potential investors.
Experts believe that, given the current economic and political uncertainty, there is little hope for significant increases in foreign investment in the near future.
Lower FDI in Region
Pakistan’s FDI is considerably lower than that of other regional countries. Furthermore, the country has struggled to privatize loss-making state-owned enterprises due to the ongoing economic and political instability.
China remains the largest investor in Pakistan. Out of the total FDI of $1.6 billion during the first eight months of FY25, $662 million came from China, followed by $160 million from Hong Kong.
Read More: FDI Surges in Pakistan, Boosted by Renewable Energy and Digital Sectors
Other notable investments included $167 million from the United Kingdom and $68 million from the United States.
FDI in Last Few Years
Foreign Direct Investment (FDI) in Pakistan has seen fluctuating trends over the past few years, influenced by political, economic, and security factors.
In recent years, FDI has remained relatively low compared to neighboring countries, despite efforts by the government to attract foreign investments.
In FY2020, FDI stood at approximately $2.5 billion, marking a slight increase from previous years.
However, this figure dropped significantly in FY2021, falling to around $1.8 billion due to the COVID-19 pandemic and economic challenges.
Also Read: Pakistan Records $270.9 Million in FDI for May
China-Pakistan Economic Corridor (CPEC)
In FY2022, FDI experienced a modest rebound, reaching $1.85 billion, with China being the largest investor, mainly driven by infrastructure and energy projects under the China-Pakistan Economic Corridor (CPEC).
In FY2023, FDI continued to struggle, dropping to approximately $1.5 billion, reflecting concerns over political instability, security issues, and an unpredictable economic environment.
In the first eight months of FY2025, Pakistan’s FDI has increased by 41% compared to the previous year, totaling $1.6 billion.
However, it remains far behind other regional competitors, and experts predict limited growth in the coming years unless political and economic stability improves.
China, Hong Kong, the United Kingdom, and the United States remain the largest sources of investment.
