Saira Imran Pakistan has seen a 22% decline in foreign investment during the first two months of the current financial year. The fall reflects rising inflation and growing economic instability that have shaken investor confidence.
FDI Falls in July and August
According to the State Bank of Pakistan, the country received $364 million in foreign direct investment (FDI) during July and August 2025. This amount is 22% lower compared to the same period last year when inflows were $467 million.
In August alone, foreign investment stood at $156 million, showing a 43% decline compared to August 2024, when the inflow was $272 million. On a monthly basis, August also showed a 25% drop compared to July, when investment totaled $208 million.
Sector-Wise Investment Breakdown
The report further showed how foreign capital was spread across different industries:
- Food sector: $14.3 million
- Textiles: $2.7 million
- Petroleum refining: $6.3 million
- Mining: $6 million
- Pharmaceuticals: $2.9 million
- Cement: $2.3 million
- Electrical machinery: $25.8 million
- General machinery: $25.8 million
- Transport equipment: $9.1 million
- Power sector: $156.9 million
- Trade: $11.1 million
- Financial businesses: $110.2 million
The power sector and financial businesses remained the top contributors, receiving the highest investment inflows.
Economic Concerns
The fall in foreign investment in Pakistan comes at a difficult time for the country. The economy is already under pressure due to inflation, rising costs, and unstable market conditions. Analysts warn that if the downward trend continues, the effects could be serious.
Possible Impacts
- Economic growth may slow down.
- Job creation could decline, leading to higher unemployment.
- Investor confidence may weaken further if conditions do not improve.
Steps Needed for Recovery
Experts suggest that the government must take urgent steps to restore investor trust and stabilize the economy. Key actions include:
- Controlling inflation.
- Creating favorable policies for investors.
- Ensuring economic stability through reforms.
By addressing these challenges, Pakistan can work to rebuild confidence and attract stronger foreign investment in the future.
