KARACHI: Foreign direct investment (FDI) increased by 20 per cent during the first half of the current financial year (FY25), the State Bank reported on Friday.

The SBP data shows positive growth in FDI, but the total size of the inflows has not been significant enough to drive substantial economic change.

According to the data, China remained the largest source of FDI in Pakistan, continuing its position as the biggest investor in recent years.

Pakistan received a total of $1.329 billion in FDI during the first half of the current fiscal year, compared to $1.108bn in the same period last year, reflecting a growth of 20pc.

Of this total, China contributed $535.5 million, accounting for over 40pc of the total FDI, underscoring the limited interest from other countries in investing in Pakistan. Hong Kong contributed $134.3m to the total FDI during the six-month period.

Other significant contributors included the UK and Switzerland, with $130m and $100m, respectively. Notably, no Arab country made any significant investments during this period.

Despite the 20pc increase in FDI, the inflows remain well below expectations. Some financial experts believe that while strong macroeconomic indicators such as exchange rate stability, a current account surplus, and higher foreign exchange reserves are positive, political uncertainty continues to deter foreign investors.

Published in Dawn, January 18th, 2025