Pakistan’s FDI inflows rise 11% in July but overall investment slips

ISLAMABAD: Pakistan’s economic outlook presented a mixed picture in July 2025, with foreign investment inflows losing momentum and the current account balance slipping back into deficit, according to the latest data released by the State Bank of Pakistan (SBP).

The country attracted $208.09 million in foreign direct investment (FDI) during July, up from $194.7 million in the same month last year. However, the figure was significantly lower than the $385 million recorded just a month earlier, showing that investor confidence remains uneven.

Within the breakdown, FDI inflows rose to $317.11 million, an 11 percent jump year-on-year, though outflows also expanded, climbing to $109.02 million. Portfolio investment turned negative, as equity securities saw an outflow of $33.79 million, reversing the inflow of $23.64 million seen in July 2024.

Foreign private investment stood at $174.3 million, compared to $218.34 million last year, while foreign public investment registered an outflow of $10.78 million. This pulled total foreign investment in July down to $163.52 million, less than half of the $363.39 million reported in the same month last year.

China leads inflows but regional trend weakens

China remained the largest contributor, investing $51 million in July, which accounted for a quarter of total FDI. Even so, this was a steep 39 percent drop from last year. Hong Kong followed with $30 million, also down 39 percent. On the other hand, Switzerland, the UAE, and the UK showed modest growth, contributing $21 million, $20 million, and $17 million, respectively.

Germany, which invested $4 million a year earlier, recorded no activity, while Norway’s inflows halved to $5 million. The United States remained unchanged at $4 million.

Current account returns to deficit

On the external front, the current account posted a deficit of $254 million in July, reversing June’s surplus of $335 million. Despite this setback, the deficit was still lower than the $348 million recorded in July 2024.

Analysts said the shortfall was mainly due to rising imports as the domestic economy gained strength. Yet, strong remittances and relatively stable global commodity prices are expected to cushion external pressures in the coming months.

Meanwhile, the rupee extended its winning streak in the interbank market, closing at 281.96 against the US dollar on August 19, its eighth straight session of gains.

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