Pakistan recorded foreign direct investment of $173.28 million in January 2026, representing a decline from $235.84 million received in the same month last year, according to the latest data released by the State Bank of Pakistan. The figures highlight a moderation in foreign capital inflows, reflecting both global investment trends and domestic economic conditions. Despite the monthly inflows, cumulative FDI during the first seven months of FY26 stood at $981.36 million, significantly lower than $1.66 billion in the same period of the previous fiscal year.
Breaking down the January figures, the country witnessed an inflow of $265.52 million in direct investments, which fell 19.94 percent year-on-year, while outflows amounted to $92.24 million, reflecting a smaller reduction of 3.74 percent compared with January 2025. The net result points to continued foreign participation in Pakistan’s sectors, albeit at a reduced pace relative to last year.
Portfolio investment under FDI showed contrasting trends. In January 2026, there was an outflow of $62.44 million through equity securities, compared with an outflow of $10.14 million in January 2025, signaling selective withdrawal from the equity markets and heightened investor caution. Analysts suggest this trend reflects both market volatility and global investor sentiment, which have influenced equity allocations in emerging economies like Pakistan.
Private foreign investment into the country totaled $110.84 million in January, down sharply from $225.7 million in the same month of the previous year. Conversely, foreign public investment through equity securities recorded an inflow of $199.16 million during the month, underscoring government-linked projects and institutional investor participation as a stabilizing factor in foreign capital movements.
Accordingly, the total foreign investment for January 2026 stood at $310 million, compared with $140.63 million in January 2025, indicating that public and private components together contributed to net positive investment during the review month despite weaker private inflows. The composition suggests that while private investors remain cautious, public and institutional channels continue to provide support for capital inflows.
Cumulative figures for the first seven months of FY26 reveal total foreign investment of $517.43 million, substantially lower than $1.48 billion recorded in the corresponding period of the previous fiscal year. The decline in cumulative inflows underscores the broader slowdown in foreign participation across sectors, reflecting both global economic headwinds and domestic policy considerations. Sector-specific performance, macroeconomic stability, and policy clarity are likely to be key factors shaping FDI trends in the coming months.
Overall, while January 2026 displayed moderate investment activity, the year-on-year decline and weaker cumulative performance highlight the challenges facing Pakistan in attracting sustained foreign investment. Analysts indicate that measures to enhance investor confidence, improve regulatory predictability, and stimulate private sector participation will be critical to reversing the downward trajectory in foreign direct and portfolio investment over the remainder of FY26.
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