FDI picks up, but the real test lies ahead

Foreign direct investment into Pakistan reached USD315.9 million in August, the best monthly showing in two years, according to Business Recorder. That was around 80 percent higher than a year earlier and 77 percent above July, as inflows strengthened and outflows eased. Net FDI for the first two months of FY27 totalled USD494.5 million, up 24.1 percent from USD398.6 million in the same stretch of last year.

Gross inflows grew 18.4 percent to USD705.9 million, whereas outflows rose about 7 percent to USD211.5 million. The improvement therefore owes more to larger receipts than to reduced withdrawals. China was the top source in both August and the two-month period, with the UAE and Canada also contributing. UK investment nearly doubled and Kuwait's rose 63 percent, while Hong Kong and Switzerland declined.

Financial business attracted the most net FDI, up roughly 30 percent, while power was slightly lower. Trade jumped more than eightfold to USD89.4 million and electronics reached USD45.7 million, close to 27 times the prior-year level. Net outflows were recorded in mining and quarrying, communications and oil and gas exploration, lifting outflow sectors to USD91.3 million from USD24 million. Business Recorder cautions that gains remain concentrated in few countries and sectors, and volumes are modest against the size of the economy, so a broad turnaround is premature.