ISLAMABAD: Despite perceptions in some quarters that Pakistan’s economy is “un-investable,” a comprehensive review of official data, investor sentiment, and recent multinational decisions suggests that the country has moved beyond crisis management and is entering a recovery phase.
Khurram Schehzad highlighted on his X account that much of the pessimism around Pakistan’s investability is driven by selective anecdotes and outdated assumptions rather than current economic realities. He noted that structural challenges remain, but macroeconomic indicators and tangible investment activity present a far more optimistic picture.
The latest OICCI Investor Sentiment Survey indicates that 73% of foreign investors already operating in Pakistan now consider it a viable destination for new foreign direct investment, up from 61% previously. This sentiment is supported by concrete decisions such as Nestlé’s additional $60 million investment to make Pakistan a regional manufacturing and export hub serving 26 international markets. Similarly, SOCAR has finalized plans for oil and gas investments, citing market depth and reform momentum.
Contrary to claims of industrial decline, economy-wide data shows continued recovery and growth. Over the past 15–18 months, around 20 new foreign investors have entered Pakistan, while several large domestic groups have expanded capacity. Companies including Google, BYD, Aramco, Gunvor, Abu Dhabi Ports, Samsung, Turkish Petroleum, and Etisalat have announced or expanded operations, reflecting renewed investor interest.
Industrial activity indicates a recovery trajectory rather than systemic collapse. Large-Scale Manufacturing grew 6% year-on-year during July–November FY26. Other indicators also point to growth: automobile sales rose 32% YoY, cement sales 10% YoY, fertilizer sales 24% YoY, mobile phone sales 20% YoY, and petroleum sales 2% YoY.
Macroeconomic stabilization is evident in key metrics. Inflation has dropped sharply from 23.4% to 4.5%. Pakistan recorded a $2.1 billion current account surplus in FY25, its first in 14 years, while foreign exchange reserves increased by more than 55% YoY. Import cover improved from two weeks to over 2.6 months, debt-to-GDP declined to around 70%, and the country achieved a primary fiscal surplus of 2.4% of GDP.
External stress risks are also contained. A $1.17 billion current account deficit in the first half of FY26 reflects economic re-acceleration rather than imbalance. Remittances rose 11% YoY to $19.7 billion, technology exports reached a record $437 million in December 2025, and 80% of imports comprise raw materials, intermediates, and capital goods, indicating productivity-linked demand.
Export performance further challenges negative narratives. Goods exports rose 21% MoM in December 2025, driven by value-added textiles including knitwear, garments, bedwear, and made-ups. Non-textile manufacturing exports, including engineering goods, pharmaceuticals, sports goods, leather, cement, and surgical instruments, also recorded gains. Textile exports in 1HFY26 remain higher year-on-year, even as lower-value segments adjust.
While the cost of doing business remains a concern, reforms are underway. Regulatory improvements are expected to generate over Rs300 billion in annual savings. Energy-sector reforms include tariff rationalization, contract renegotiations, and introduction of competitive mechanisms such as wheeling and multi-buyer systems. Tariff reforms are expected to boost productivity and export competitiveness after decades of delay.
Foreign and private investment, though below Pakistan’s long-term potential, is rising. FDI reached $2.5 billion in FY25, up 5% YoY, and FY26 inflows are running higher than commonly cited figures. Renewed interest spans FMCG, energy, manufacturing, technology, and services sectors.
Taken together, the evidence shows that Pakistan’s economy is neither collapsing nor un-investable. Stabilization has been achieved, recovery is underway, and reforms are in progress. While policy debates remain valid, they should be grounded in facts rather than fear-driven narratives.
Pakistan’s economic trajectory, as reflected in industrial activity, export growth, improved fiscal metrics, and foreign investor engagement, points to cautious optimism and renewed confidence in the country as a destination for investment.
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