Pakistan has recorded a notable improvement in foreign investment at the beginning of fiscal year 2026-27, with foreign direct investment (FDI) showing strong growth during the first two months. The latest figures point to increased investor activity, particularly in August, when foreign inflows rose significantly compared with the same period last year.
According to central bank data, Pakistan’s net FDI reached $494 million during July and August, representing a 24% increase from the $399 million recorded during the corresponding period of the previous fiscal year.
August Brings a Major Boost
August proved to be particularly encouraging for foreign investment. Net FDI climbed to $316 million, compared with $175 million in August of the previous year. This represents an impressive 80% year-on-year increase.
The monthly performance also improved substantially. Net FDI in August was $316 million compared with $179 million in July, marking a rise of around 77%.
Gross FDI inflows also strengthened considerably. Pakistan received approximately $402 million in gross FDI during August, up 53% from $263 million a year earlier. The figure was also higher than the $304 million recorded in July.
At the same time, FDI outflows remained relatively contained. They stood at $86 million in August, slightly below the $88 million recorded in the same month last year and considerably lower than July’s $125 million.
Financial and Power Sectors Remain Important
The financial services and power sectors continued to attract substantial foreign investment.
During the first two months of FY27, the financial services sector received $147 million, compared with $113 million during the same period last year. This indicates stronger foreign participation in Pakistan’s financial industry.
The power sector attracted $145 million, although this was lower than the $157 million received during the corresponding period of FY26. Despite the decline, the sector remained one of the largest recipients of foreign investment.
China, UAE Among Major Investors
Country-wise investment figures also showed stronger participation from some of Pakistan’s key investment partners.
Chinese companies invested approximately $176 million during July-August FY27, compared with $121 million a year earlier. Investment from the United Arab Emirates also increased, reaching $58 million compared with $35 million in the same period last year.
Canada was also identified among the major contributors to Pakistan’s net FDI during the period.
The rise in investment from these countries suggests continued interest in Pakistan’s major economic sectors and business opportunities.
Private Investment Shows Significant Growth
The improvement was not limited to FDI. Private foreign investment also expanded considerably.
Private investment reached $296 million in August, more than double the $134 million recorded in August last year. On a monthly basis, it was also 50% higher than the $197 million recorded in July.
For the first two months of FY27, cumulative private investment stood at $493 million, compared with $324 million during the same period of the previous fiscal year. This represents an increase of approximately 52%.
Meanwhile, private portfolio investment in equity securities registered a net outflow of $20 million in August. However, the overall position for July-August was much better than last year, with the cumulative net outflow shrinking to just $2 million from $75 million.
Public Investment Also Improves
Public-sector foreign investment recorded a significant turnaround as well.
Public investment amounted to $42 million in August, compared with a net outflow of $42 million during August of the previous year. It also increased from $26 million in July.
For the first two months of FY27, public investment reached $69 million, whereas the same period last year had recorded a net outflow of $12 million.
A major contribution came from public investment in debt securities. Such investment reached $62 million in August, compared with an outflow of $1 million a year earlier and $7 million in July.
Overall Foreign Investment Rises Sharply
When private and public investment are combined, Pakistan recorded $358 million in total foreign investment during August. This was 169% higher than the $133 million recorded in August last year and 75% above July’s $204 million.
For July-August FY27, overall foreign investment reached $562 million, compared with $312 million during the same period of FY26. This represents an 80% year-on-year increase.
What the Numbers Indicate
The early FY27 investment figures show a stronger flow of foreign capital into Pakistan. The sharp improvement in August, higher FDI from China and the UAE, and increased private and public investment all contributed to the overall rise.
However, sustained improvement in foreign investment will depend on whether Pakistan can maintain investor confidence and continue attracting capital into productive sectors. The performance during the opening months of FY27 provides a positive indication, but longer-term trends will be important in determining whether this momentum continues.
For now, the increase in FDI and broader foreign investment provides an encouraging start to Pakistan’s new fiscal year, with the financial, power and other key sectors continuing to play an important role in attracting international capital.