Why Pakistan’s economy is not “Un-Investable”

January 23, 2026 (MLN): Pakistan’s economy is increasingly being portrayed as “un-investable” in some quarters, but a fact-based review of official data, investor sentiment, and recent multinational decisions presents a very different picture.

While structural challenges remain, the broader evidence suggests that Pakistan has moved beyond crisis management, achieved macroeconomic stabilization, and is now entering a recovery phase.

Khurram Schehzad, writing on his X (formerly Twitter) account, notes that much of the pessimism surrounding Pakistan’s investability is driven by selective anecdotes and outdated assumptions rather than current data.

The latest OICCI Investor Sentiment Survey shows that 73% of foreign investors already operating in Pakistan now consider the country a viable destination for new foreign direct investment, up from 61% previously.

This shift in sentiment is reinforced by tangible investment decisions, including Nestlé’s additional $60m investment to turn Pakistan into a regional manufacturing and export hub serving 26 international markets, and SOCAR’s announcement that it is finalizing its oil and gas investment, citing Pakistan’s market depth and reform momentum.

Claims that investors are exiting and that de-industrialization is accelerating are also not supported by economy-wide data.

Over the past 15–18 months, around 20 foreign investors have entered Pakistan, while several large local groups have expanded capacity.

New and expanding foreign names include Google, BYD, Aramco, Gunvor, Abu Dhabi Ports, Samsung, Turkish Petroleum, Etisalat, and IFC-backed syndications linked to Reko Diq.

Industrial indicators point to recovery rather than collapse.

Large-Scale Manufacturing grew 6% year-on-year during Jul–Nov FY26, while first-half FY26 data shows broad-based improvement across the real economy.

Automobile sales rose 32% YoY, cement sales 10% YoY, fertilizer sales 24% YoY, mobile phone sales 20%, and petroleum sales 2% YoY. While some sectors continue to face stress, this pattern is consistent with stabilization phases, not systemic de-industrialization.

Macroeconomic stabilization is also visible in hard numbers.

Inflation has declined sharply from 23.4% to 4.5%, Pakistan recorded a $2.1 billion current account surplus in FY25 its first in 14 years and foreign exchange reserves have increased by over 55% YoY.

Import cover has improved from two weeks to more than 2.6 months, debt-to-GDP has fallen to around 70%, and the country has achieved a primary fiscal surplus of 2.4% of GDP, with fiscal surpluses recorded in two recent quarters.

Concerns about renewed external stress are also overstated. The $1.17 billion current account deficit in 1HFY26 reflects economic re-acceleration rather than imbalance.

Remittances reached $19.7bn, up 11% YoY, technology exports hit a record $437 million in December 2025, and nearly 80% of imports now consist of raw materials, intermediates, and capital goods indicating productivity-linked demand.

Export performance further challenges collapse narratives.

Goods exports rose 21% MoM in December 2025, led by value-added textiles such as knitwear, garments, bedwear, and made-ups.

Non-textile manufacturing exports including engineering goods, pharmaceuticals, sports goods, leather, cement, and surgical instruments also posted strong gains.

Overall, textile exports in 1HFY26 remain higher year-on-year, even as lower-value segments adjust.

The cost of doing business remains a genuine concern, but reforms are underway rather than absent.

Regulatory reforms are expected to generate over Rs300bn in annual savings, while energy-sector changes include tariff rationalization, contract renegotiations, and the introduction of competitive market mechanisms such as wheeling and multi-buyer models.

Tariff reforms aimed at boosting productivity and export competitiveness are being implemented after decades of delay.

Foreign and private investment remains below Pakistan’s long-term potential, but the notion of collapse is misleading. FDI reached $2.5bn in FY25, up 5% YoY, with FY26 inflows running higher than selectively quoted figures suggest.

New and renewed interest is visible across FMCG, energy, manufacturing, technology, and services.

Taken together, the data suggests that Pakistan’s economy is not collapsing nor “un-investable.”

The more accurate description is stabilization achieved, recovery underway, and reforms in progress.

Policy choices can and should be debated but those debates must be grounded in facts rather than fear-driven narratives.

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