Pakistan FDI Falls 27% in January 2026

Pakistan recorded net foreign direct investment (FDI) inflows of $173 million in January 2026, reflecting a 27% year-on-year decline compared to $236 million in January 2025. The figures, compiled by Arif Habib Limited using data from the State Bank of Pakistan, highlight continued volatility in external capital inflows.

Notwithstanding the annual contraction, China retained its position as the leading source of FDI during the month, contributing $73 million. However, this represented a 46% decrease compared to the corresponding period last year. China accounted for approximately 42% of total inflows in January.

Hong Kong ranked second, with $25 million in inflows, marking a 38% year-on-year reduction and representing a 14% share of the total. Investment from the United Arab Emirates declined sharply to $14 million, down 92% from $178 million in January 2025, bringing its proportional share to 8%.

In contrast, Switzerland posted a modest improvement, with FDI increasing 7% year-on-year to $17 million, contributing 10% of the overall inflows. The United Kingdom recorded $9 million, reflecting a 67% decline compared to the previous year, while South Korea’s inflows remained unchanged at $8 million.

Among smaller contributors, Kuwait demonstrated a notable surge, with inflows rising 402% to $9 million from $2 million a year earlier. Japan’s investment remained relatively stable at $4 million, albeit showing a 12% annual decline. Other countries collectively represented a limited portion of total inflows, with aggregate contributions significantly lower than the previous year.

On a month-to-month basis, foreign investment flows continue to exhibit instability, consistent with trends observed over the past year. Monthly net FDI has experienced pronounced fluctuations, including peaks in mid-2024 and marked slowdowns in early 2025, with at least one month registering net outflows.

The January 2026 figure of $173 million indicates moderation compared to several stronger months in 2024, when inflows surpassed $300 million on multiple occasions. Nonetheless, the overall pattern remains uneven, underscoring the dependence of FDI on project-driven transactions and prevailing macroeconomic conditions.

The country-wise breakdown suggests that while China remains the principal anchor of foreign investment into Pakistan, inflows from traditional partners such as the UAE and the UK have experienced substantial year-on-year weakening.