FDI in Pakistan drops 43% in H1 FY26, with telecom sector leading outflows

Foreign Direct Investment (FDI) in Pakistan sharply decreased by 43% in the first half of the fiscal year 2026, according to the latest data from the State Bank of Pakistan (SBP). The country attracted just $808 million in FDI during July-December FY26, down from $1.425 billion in the same period of FY25, marking a reduction of $616 million.

The SBP data highlights that, while the country faced FDI outflows of $1 billion, foreign investments remained at $1.813 billion. However, December 2025 witnessed a significant drop in FDI inflows, with outflows reaching $134.7 million, compared to $182.4 million in December 2024. 

Analysts have attributed these outflows to significant divestments, including Telenor’s exit from Pakistan’s telecom sector, which led to an outflow from Norway.

The power sector, historically the largest contributor to Pakistan's FDI, recorded a sharp decline in investment. FDI in the sector fell to $470.9 million in H1 FY26, down from $780.1 million in FY25. 

However, the financial sector showed growth, with FDI rising to $401.5 million, compared to $368.2 million in the same period of the previous year. This suggests continued interest in Pakistan’s banking and financial services, even amidst broader declines in other sectors.

The telecommunications sector, on the other hand, recorded substantial outflows of $431.3 million in the first half of FY26, a stark contrast to just $64.8 million in FY25. This was primarily due to major divestments, including Telenor’s exit.

There was a positive note in the food sector, where foreign investment surged to $50 million in H1 FY26, up from $18 million in FY25. Additionally, portfolio investments in the equity market showed improvement, reaching $225 million.

Total foreign investment, which includes FDI, portfolio investment, and public-private investments, stood at $207 million in the first half of FY26, a significant drop from $1.343 billion in the same period last year.

This decline in FDI raises concerns about the country's investment climate and underscores the impact of sector-specific challenges, especially in telecom and energy, on overall foreign investment.