Pakistan’s foreign investment landscape showed signs of a monthly recovery as Foreign Direct Investment (FDI) inflows climbed to $213.5 million in February 2026. This marks a significant increase from the $132.7 million recorded during the same month last year, according to the latest figures from the State Bank of Pakistan (SBP). The monthly surge was driven by a 25.9 percent year-on-year increase in gross inflows, which reached $330.5 million, while outflows simultaneously decreased by nearly 10 percent.
Despite the positive momentum in February, the cumulative outlook for the first eight months of the fiscal year (8MFY26) remains under pressure. Total FDI for the period July–February stood at $1,194.9 million, representing a 33.3 percent decline compared to the $1,793.4 million attracted during the corresponding period in FY25. Analysts suggest that while domestic stabilization is beginning to attract monthly interest, long-term foreign capital remains cautious due to persistent geopolitical risk premiums and global economic uncertainty.
China continues to be the primary architect of Pakistan’s FDI profile, contributing $140 million—approximately 66 percent—of the total net inflows for February. Other major contributors during the month included Hong Kong and Switzerland. On a cumulative basis for FY26, China remains the top investor, followed by Switzerland, the UAE, and the UK. This concentration highlights Pakistan’s continued reliance on a narrow set of bilateral partners for industrial and infrastructure capital.
Sector-wise, the Power and Financial Business segments remained the most attractive for foreign investors in February 2026. The Power sector continues to draw significant interest as Pakistan works toward energy self-reliance and infrastructure upgrades. Financial businesses also saw a healthy influx of capital, reflecting confidence in the country’s banking reforms and digital integration efforts. In contrast, other sectors have struggled to attract similar levels of interest, leading to a highly concentrated investment profile.
The broader investment picture, including portfolio and public investment, showed mixed results. While foreign private investment rose to $135.5 million in February, the equity market saw a portfolio outflow of $78 million. However, foreign public investment through debt securities provided a buffer, recording an inflow of $51.2 million—a sharp reversal from the $12.4 million outflow seen in February 2025. As Pakistan expands initiatives like the Roshan Digital Account to institutional investors, the government remains hopeful that these diversified channels will eventually stabilize the long-term FDI trajectory.
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