Foreign direct investment (FDI) in Pakistan dropped by 45% year-on-year in February 2025, amounting to $95 million, according to a State Bank report. However, despite this sharp monthly decline, cumulative FDI from July 2024 to February 2025 rose by 41%, reaching $1.618 billion compared to $1.147 billion in the same period last year.

Challenges such as security concerns and rising terrorism are discouraging foreign investors, painting a bleak outlook for significant FDI increases in the near future. Economic analysts highlight that these issues, alongside political instability, are hindering the privatization of struggling state-owned enterprises and limiting Pakistan’s competitiveness in attracting investments compared to other countries in the region.

China continues to dominate as Pakistan's largest investor, contributing $662 million of the total FDI during the first eight months of fiscal year 2025. Other key contributors include Hong Kong with $160 million, the United Kingdom with $167 million, and the United States with $68 million.