Pakistan recorded a foreign direct divestment of $134.7 million in December 2025, marking a sharp reversal from an investment inflow of $182.4 million recorded in the same period last year, according to the latest data released by the State Bank of Pakistan. The figures reflect rising capital outflows and continued pressure on foreign investor sentiment amid economic and financial challenges.
On a month-on-month basis, the performance also deteriorated significantly, as Pakistan had attracted foreign direct investment of $180 million in November 2025. The shift from inflows to net divestment within a month underscores heightened volatility in capital movements and the cautious stance of foreign investors.
On a cumulative basis, during the first half of fiscal year 2025-26, Pakistan attracted total foreign direct investment of $808.1 million. This represents a substantial decline of 43.28 percent compared to $1.42 billion recorded in the same period of the previous fiscal year, highlighting a sustained slowdown in foreign capital inflows.
A closer breakdown of direct investment data for December shows that while gross inflows amounted to $322.5 million, they declined by 5.87 percent on a year-on-year basis. In contrast, outflows surged sharply to $457.3 million, rising by more than 1.85 times compared to December 2024. The sharp increase in outflows was the primary driver behind the net divestment recorded during the month.
The data suggests that foreign investors repatriated capital or exited existing positions at a faster pace than new investments were being committed, resulting in negative net flows. Analysts note that such trends often reflect heightened risk perceptions, uncertainty around economic policy, or concerns related to returns and currency stability.
In terms of portfolio investment under foreign direct investment, an outflow of $32.9 million was recorded through equity securities during December. While this represented an improvement compared to an outflow of $65.5 million in December 2024, it still indicated continued selling pressure in equity-related foreign investments.
Foreign private investment into the country stood at negative $167.7 million in December 2025, compared to private investment inflows of $116.9 million recorded in the same month last year. This reversal highlights weakening confidence among private foreign investors, who remain sensitive to macroeconomic conditions, interest rate trends, and exchange rate dynamics.
In contrast, foreign public investment provided some limited support during the month. An inflow of $46.1 million was recorded under foreign public investment through equity securities, partially offsetting private sector outflows. However, this was not sufficient to counterbalance the overall scale of divestment.
As a result, total foreign divestment during December amounted to $121.6 million, significantly higher than the divestment of $48 million recorded in December 2024. The widening gap points to growing challenges in attracting and retaining foreign capital amid a complex economic environment.
On a cumulative basis, total foreign investment during the first half of FY26 stood at $207.4 million, sharply lower than $1.343 billion recorded in the corresponding period last year. The steep decline reflects both reduced inflows and higher outflows across direct and portfolio investment channels.
The latest SBP data indicates that reviving foreign investment flows remains a key challenge for Pakistan, with sustained macroeconomic stability, policy clarity, and improved investor confidence seen as critical factors in reversing the downward trend in the coming months.
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