KARACHI: Despite a relatively small sum, foreign direct investment (FDI) surged by 165 per cent in March, even as the region remained engulfed in full-scale conflict.
The data posted by the State Bank of Pakistan on Thursday showed that the country received $167 million in March compared to just $63m a year ago; an increase of $104m.
However, the country recorded a 27pc plunge in FDI inflows to $1,354m during July-March FY26 compared to $1,856m in the same period last year.
For more than a decade, the country was out of focus for foreign investors, while the internal political and economic uncertainties were other reasons for the low inflows into the country.
Inflows drop 27pc in 9MFY26
Experts monitoring the current ceasefire in the Gulf after 40 days of war were not hopeful about any significant FDI inflows.
“Last month’s outflow was largely driven by foreign investors reducing exposure to higher-risk assets, particularly bonds, as Pakistan’s credit default swap widened by around 200bps. That pressure has eased this month as market sentiment has improved. However, long-term FDI remains weak, indicating investors are still cautious about Pakistan’s outlook,” said Komal Mansoor, head of research at Tresmark.
Most of the inflows came from a few countries. For example, China has been the largest investor for many years and has remained at the top of the list. In March, total FDI was $167m, with China and Hong Kong together accounting for $78m, of which China contributed $43m and Hong Kong $35m.
During July-March FY26, FDI inflows from China and Hong Kong were $678.6m and $253m, respectively; the two countries collectively invested $928m of the total $1.354bn.
Other significant inflows were $144m from the UAE; $153m from Switzerland; $88m from the UK and $66m from Japan.
Most of the financial experts did not express optimism about future FDI inflows, as they see the war situation in the Gulf as still unclear.
Published in Dawn, April 17th, 2026