Pakistan recorded a net foreign direct investment (FDI) inflow of $214 million in May 2026, reflecting a decline of 7.8 percent compared with $232 million recorded during the same month last year, according to data released by the State Bank of Pakistan (SBP).
The latest figures indicate a slowdown in foreign investment inflows despite continued support from major investors, including China and the United Arab Emirates.
Gross Inflows Reach $295 Million
During May, gross FDI inflows amounted to $295.1 million, while outflows stood at $80.8 million.
After accounting for these outflows, net foreign direct investment settled at $214.3 million for the month.
The figures highlight continued investor interest in Pakistan, although the pace of investment remained below last year’s level.
Foreign Portfolio Investment Posts Net Outflow
On the portfolio side, Pakistan witnessed a net outflow of $16.5 million in foreign portfolio investment (FPI) during May.
As a result, total foreign private investment stood at $197.8 million.
Meanwhile, foreign public investment contributed an additional $248.2 million, lifting total foreign investment to $445.9 million during the month.
China and UAE Remain Major Investors
China retained its position as the largest source of direct investment into Pakistan in May.
According to the SBP data, Chinese investors brought in $79.3 million during the month.
The United Arab Emirates ranked second with investments worth $50.5 million.
Other major contributors included:
Hong Kong: $27.1 million
Switzerland: $17.4 million
United Kingdom: $14.8 million
These countries collectively accounted for a significant share of Pakistan’s foreign direct investment inflows.
Power Sector Attracts Highest Investment
Sector-wise data showed that the power sector attracted the largest amount of foreign investment during May.
The sector received inflows of $85.8 million, supported primarily by hydropower and coal-based energy projects.
Hydel projects attracted $36.3 million, while coal-related projects brought in $43.6 million.
The continued inflow into the energy sector reflects investor confidence in Pakistan’s power infrastructure and long-term energy requirements.
Financial Sector Receives Strong Interest
The financial business sector emerged as the second-largest recipient of foreign investment.
The sector attracted net inflows of $59.6 million during May.
Meanwhile, the transport sector secured investments amounting to $34.4 million.
Other sectors also received foreign capital, including:
Electrical machinery: $12.5 million
Petroleum refining: $6.3 million
The diversified investment pattern suggests continued foreign interest across multiple segments of the economy.
Cumulative FDI Drops More Than 28%
Despite positive monthly inflows, cumulative foreign direct investment during the first 11 months of fiscal year 2025-26 showed a sharp decline.
According to SBP data, Pakistan received $1.624 billion in FDI during July-May FY26.
This represented a decline of 28.3 percent compared with $2.267 billion received during the corresponding period of FY25.
The figures point to weakening momentum in attracting long-term foreign investment.
Portfolio Outflows Increase Significantly
Foreign portfolio investment recorded a substantial deterioration during the current fiscal year.
Net portfolio outflows reached $1.145 billion during the first 11 months of FY26, significantly higher than the outflow of $312.3 million recorded during the same period last year.
The larger outflows reduced overall foreign investment considerably.
Total foreign investment during July-May FY26 stood at $477.6 million, compared with $1.562 billion during the corresponding period of FY25.
Investment Trends Reflect Economic Challenges
The decline in cumulative FDI and rising portfolio outflows come as Pakistan continues efforts to stabilize its economy and attract foreign investors.
Analysts say global economic uncertainty, domestic challenges, and cautious investor sentiment have contributed to the slowdown in foreign investment.
However, continued support from countries such as China and the UAE and investment in the energy and financial sectors indicate that Pakistan remains an attractive destination for selected strategic investments.
Outlook for FY26
With one month remaining in the fiscal year, investors and policymakers will closely monitor foreign investment trends.
Higher and more diversified investment inflows are considered essential for strengthening Pakistan’s external sector, supporting economic growth, and generating employment opportunities.
The performance during June will determine the final foreign investment picture for FY26 and provide insight into investor confidence heading into the next fiscal year.