Pakistan foreign investment rebounds 264% as new fiscal year begins

LAHORE: Pakistan opened the new fiscal year with a sharp rebound in Foreign Direct Investment (FDI), giving the economy an early boost as the government seeks to attract larger and more sustained foreign capital inflows.

FDI rose 264% from the previous month to $179 million in July, the first month of FY2026-27, according to State Bank of Pakistan data. While the increase marked a stronger start to the fiscal year, July inflows remained 20% below the $224 million recorded in the same month last year.

The composition of the inflows also points to where foreign investors are currently finding opportunities. The power and financial services sectors attracted the largest investments during the month, while China and Canada were the leading sources of inflows, according to Topline Securities.

The power sector received $57.5 million in FDI in July, compared with $86.8 million in June and $70.8 million in July 2025.

Financial services attracted $62.3 million, down from $87 million in June but higher than the $58.8 million recorded in July last year.

Stability supports investment appetite

Tabish Abbas, senior research analyst at Spectrum Securities Ltd., told Pakistan TV Digital that the increase came despite continued geopolitical uncertainty and pressure on the import bill.

He pointed to the government’s efforts to maintain continuity of the IMF program and improvements in Pakistan’s credit outlook as factors shaping the investment environment.

Abbas also highlighted macroeconomic stability, IMF continuity, improving external relations, strategic investments and developments in individual sectors as factors behind the improving appetite for Pakistani assets.

The July increase therefore comes against a broader effort to strengthen investor confidence, with policymakers seeking to maintain macroeconomic stability while creating conditions for longer-term foreign investment.

Mining and strategic sectors offer potential

There are, however, areas that could broaden the investment story in the months ahead.

Abbas said Pakistan’s growing strategic and defence agreements with regional countries could open the door to potential investments.

He also pointed to interest from the US government in Pakistan’s mining sector, including Reko Diq, as a development that could provide a significant boost to foreign investment in mining.

Other industries could add to that pipeline.

Refinery upgrades and the government’s auto policy, Abbas said, could attract additional investment and create opportunities for capital-market activity.

These sectors could become important sources of new capital if planned projects translate into actual investment commitments and execution.

Foreign reinvestments

The outlook is also being shaped by what foreign investors already committed to Pakistan are doing.

A recent report by the Overseas Investors Chamber of Commerce and Industry (OICCI) said foreign companies had continued to reinvest in Pakistan, expand their operations and contribute to the economy despite difficult economic conditions.

OICCI member companies invested more than $23 billion in Pakistan over the past decade, according to the chamber’s Members’ Contribution to the Economy 2025 report.

That compares with Pakistan’s cumulative net FDI inflows of about $21 billion over the same period.

The chamber said its members have continued to reinvest earnings and expand their operations despite difficult economic conditions, suggesting that the foreign investment story extends beyond the monthly FDI figures recorded by the central bank.

The broader numbers also show the scale of foreign-invested businesses in Pakistan’s economy.

OICCI members generated Rs13.1 trillion in gross revenue, held Rs42 trillion in assets, invested Rs615 billion in capital expenditure and contributed Rs3.2 trillion in government levies during FY2025, according to the chamber’s report.

Stronger start, sustained inflows

The latest July figures and the OICCI report offer two different views of Pakistan’s foreign investment story.

One captures the movement in FDI at the start of the new fiscal year, while the other highlights the capital deployed and economic contribution of foreign-invested companies over the past decade.

For now, July has given Pakistan a stronger start to FY2026-27.

The bigger challenge will be turning that monthly rebound into sustained investment, particularly in sectors such as mining, energy, manufacturing and infrastructure, where larger projects could have a more lasting impact on growth, exports and foreign-exchange earnings.