Foreign investment in Pakistan falls 33% to $1.2 billion in July–February amid oil shock, global uncertainty

Foreign direct investment (FDI) into Pakistan declined by 33% during the first eight months of FY26, reflecting weaker inflows amid global uncertainty and rising oil prices linked to the Middle East conflict.

According to State Bank of Pakistan data, net FDI stood at $1.195 billion in July–February FY26, compared with $1.793 billion in the same period last year.

However, on a monthly basis, FDI increased in February to $213.5 million, up from $132.7 million in February last year.

China, Hong Kong and Switzerland remained the largest sources of investment during the period. Chinese inflows fell to $635.7 million from $920.7 million a year earlier, while investment from Hong Kong declined to $219 million from $315.8 million.

In contrast, Switzerland’s contribution increased to $141.4 million compared with $101.9 million in the same period last year.

Sector-wise, investment in the power sector dropped to $627.4 million during July–February FY26 from $964.6 million a year ago.

At the same time, FDI in the electronics sector rose to $113.5 million from $72.7 million, while financial businesses recorded inflows of $523.2 million, up from $484.3 million last year.

The decline in overall FDI comes amid ongoing geopolitical tensions in the Middle East, which have led to higher oil prices, increased freight costs and disruptions in global supply chains.

Oil prices have remained elevated as shipping through the Strait of Hormuz has been affected following the escalation of hostilities on February 28.

Analysts note that continued volatility in global energy markets and external sector pressures could weigh on Pakistan’s investment outlook in the coming months.