Pakistan’s power sector emerged as the leading recipient of foreign direct investment in January 2026, attracting net inflows of $70.87 million, according to the latest figures released by the State Bank of Pakistan. The data underscores continued foreign interest in the country’s energy infrastructure despite broader fluctuations in overall capital flows.
The Financial Business sector ranked second during the month, recording net inflows of $60.54 million, followed by the Electrical Machinery sector with $12.81 million. These figures reflect sectoral diversification within January’s FDI inflows, even as total foreign investment remains below last year’s levels on a cumulative basis.
In contrast, the Mining and Quarrying sector experienced the largest net outflow during January, with foreign investors withdrawing $9.78 million. The withdrawal signals persistent caution in certain extractive segments, which have faced volatility in recent fiscal cycles.
Looking at cumulative data for the first seven months of FY25, the power sector maintained its position as the top FDI recipient, drawing $541.79 million in net inflows. However, this figure represents a decline compared to $890.32 million recorded in the corresponding period of FY24, indicating moderation in year-on-year inflows despite continued dominance in sectoral rankings.
The Financial Business sector followed closely, securing cumulative net FDI of $462.05 million during 7MFY25, an increase from $432.42 million in the same period last year. The uptick suggests sustained foreign participation in banking, financial services, and related segments, even amid a broader slowdown in total FDI.
The “Others” category ranked third during 7MFY25, attracting net inflows of $131.69 million. This marks a 59.77 percent year-on-year increase from $82.43 million recorded in the same period last year, highlighting selective growth in smaller or diversified sectors not classified within the primary categories.
On the downside, the Communications sector recorded the largest divestment during 7MFY25, with a negative FDI balance of $418.93 million. This represents a sharp deterioration compared to a negative $42.92 million in the same period last year, signaling substantial capital withdrawal from the segment. The scale of divestment makes communications the most pressured sector in the current fiscal period.
The Transport Equipment (Automobiles) sector reported the second-largest divestment, with net outflows of $53.79 million. While still negative, the figure reflects improvement compared to an outflow of $114.98 million in the corresponding period last year. The Construction sector also recorded divestment of $21.51 million during 7MFY25, compared to withdrawals of $15.99 million in FY24, indicating continued but moderate capital retreat.
FDI inflows during January alone totaled $173.28 million across sectors. On a cumulative basis, overall FDI during 7MFY25 stood at $981.36 million, significantly lower than the $1.66 billion recorded in the same period of the previous fiscal year. The year-on-year contraction reflects a more cautious foreign investment climate, even as select sectors such as power and financial services continue to attract capital.
The latest sectoral breakdown reveals a mixed investment environment. Energy and financial services remain focal points for foreign investors, while communications and certain industrial segments face sustained divestment pressures. Sustained recovery in aggregate FDI will likely depend on sector-specific reforms, macroeconomic stability, and investor confidence in policy continuity over the remainder of the fiscal year.
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