Net foreign direct investment in Pakistan dropped to $1.67 billion during the 2026 fiscal year, down from $2.48 billion in the previous year. Around $495 million in net foreign direct investment was recorded during July and August 2026.
Since 2010, foreign direct investment has consistently remained below 1% of the country's gross domestic product. The power sector secured 52.7% of net foreign direct investment during the first nine months of the fiscal year, while financial businesses accounted for 43.5% of the same period.
Telecommunications experienced a net outflow of $465.5 million. Goods exports fell by 5.93% to reach $30.1 billion in FY26, while imports increased by 8.14% to $69.8 billion.
September saw exports rise 17.6% year-on-year to $2.94 billion, but imports climbed by more than 11% to approximately $6.49 billion. The trade deficit for the July-September period reached $10.79 billion.
Pakistan possesses nearly $60 billion in untapped export potential, even as exports have declined from 16% of GDP in the 1990s to roughly 10% today. Shahid Anwar stated, "Pakistan needs to look beyond the headline figure for foreign investment and examine the economic activity it creates over time."
Anwar suggested a "dollar test" to evaluate major projects by measuring projected export earnings, local purchases, and foreign exchange payments over a 10-year period. He urged the Board of Investment to collaborate with industrial associations and chambers of commerce to pair Pakistani manufacturers with appropriate foreign partners.
Anwar also recommended connecting tax and tariff incentives to verified exports, workforce training, technology adoption, and domestic sourcing. Anwar added, "Attracting capital remains important, but the greater prize is investment that strengthens local production, connects Pakistani businesses with global markets and continues earning dollars long after the initial funds have arrived."
Arshad Zia noted that while many Pakistani manufacturers can produce at scale, entering overseas markets requires consistent quality, modern processes and reliable buyers. Zia explained that a foreign partner providing these capabilities can help local firms compete internationally, though he noted such joint ventures are often inaccessible to the average businessman.
