Pakistan’s investment-to-GDP ratio has remained stagnant at 13.8% in FY2025, far behind the levels seen in regional economies. Bangladesh’s investment stood at 22.4%, and countries like India and Vietnam maintained ratios above 30%, highlighting Pakistan’s ongoing struggles to attract capital investment.
Pakistan’s ratio has failed to recover from a decline from 15.6% in FY2022, further underscoring persistent challenges in raising investments for economic growth. Despite achieving macroeconomic stability through its hybrid and multiparty setup, investor sentiment and outcomes have not shown significant improvement.
Senior corporate executives privately acknowledge frustration with the performance of the investment facilitation council, which was designed as a single-window platform to cut red tape. “Discipline has delivered many achievements in human progress, but it can also discourage new thinking,” said a business association official familiar with investor outreach, according to The Express Tribune.
Pakistan’s investment strategies have largely relied on traditional sectors, such as conventional oil refining, which fail to attract modern industrial capital. “Pakistan’s investment ratio is structurally disconnected from the region,” said Maryam Ayub. “Even economies facing shocks maintain much higher investment than Pakistan, which indicates deep domestic constraints rather than temporary weakness.”
Banking data further highlights the issue, with government borrowing dominating credit flows in 2025, leaving private sector financing far behind. Government borrowing ranged from PKR 30 trillion to PKR 36 trillion per month, compared to just PKR 9.5 trillion to PKR 10.9 trillion for the private sector. “Banks prefer lending to the government because it is risk-free and profitable,” Ayub said. “That keeps banks healthy but leaves industry underfinanced.”
Forward-looking indicators, such as the Business Confidence Index, also reflect declining optimism, with businesses remaining cautious despite claims of stabilisation. Exports remain volatile, and limited foreign direct investment (FDI), which stood at USD 2.49 billion in FY2025, further indicates a lack of export-oriented investment. “Restricting imports is not a growth strategy. Pakistan has not expanded export capacity comparable to regional peers,” Ayub concluded.
Economists warn that if investment remains below 15% of GDP, Pakistan’s sustainable growth rate may stagnate at 3-4%, placing it further behind regional competitors. “If investment remains below 15% of GDP, Pakistan’s sustainable growth rate will stay near 3-4%. That is stagnation relative to regional peers,” Ayub said.
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