Karachi – April 18, 2025: Pakistan’s Foreign Direct Investment (FDI) experienced a significant downturn in March 2025, with net inflows dropping by 91% year-on-year. According to data from the State Bank of Pakistan (SBP), net FDI for March stood at just $26 million, a stark contrast to the $294 million recorded in the same month the previous year.
The decline was primarily driven by a substantial increase in FDI outflows, which surged by 200% to $151 million compared to $50 million in March 2024. In contrast, FDI inflows decreased by 49% to $177 million, down from $344 million in March 2024. This sharp decline in both inflows and the rise in outflows underscore the challenges facing Pakistan’s investment climate.
Despite the March setback, cumulative FDI for the first nine months of Fiscal Year 2025 (9MFY25) showed a 14% year-on-year increase, totaling $1.64 billion, up from $1.44 billion in the same period last year. This growth was largely propelled by substantial investments from China, which contributed $986.7 million, followed by $196 million from Hong Kong, $191.8 million from the United Kingdom, $152.6 million from Switzerland, and $98.1 million from Canada .
Sector-wise, the power sector emerged as the leading recipient of FDI, attracting $863.5 million, accounting for a significant portion of the total inflows. This was followed by the financial business sector with $533.4 million, and the oil and gas exploration sector, which received $219.7 million. These sectors continue to be pivotal in driving foreign investment into the country.Profit by Pakistan Today
The sharp decline in March’s FDI figures has raised concerns among economic analysts and policymakers. Experts attribute this downturn to a combination of factors, including political instability, security concerns, and global economic uncertainties. These challenges have led to diminished investor confidence, resulting in reduced inflows and increased outflows of foreign capital.
In response to these developments, the government has reiterated its commitment to creating a more conducive environment for foreign investment. Initiatives such as the establishment of the Special Investment Facilitation Council aim to streamline processes and enhance transparency to attract and retain foreign investors.Dawn+2Dawn+2Dawn+2
However, analysts caution that without addressing underlying issues such as political instability and security concerns, these efforts may not yield the desired outcomes. The recent decline in FDI serves as a stark reminder of the challenges Pakistan faces in attracting and retaining foreign investment, which is crucial for economic growth and development.
Looking ahead, stakeholders are closely monitoring the government’s policy responses and their impact on investor sentiment. The ability to restore confidence among foreign investors will be pivotal in reversing the current downward trend in FDI and ensuring sustainable economic growth for Pakistan.