Foreign Direct Investment Plunges by 25% in Pakistan During FY23

Foreign Direct Investment Plunges by 25% in Pakistan During FY23

Karachi, July 18, 2023 – Pakistan has experienced a significant decline of 25% in Foreign Direct Investment (FDI) during the fiscal year 2022-23, as revealed by data released by the State Bank of Pakistan (SBP) on Tuesday.

The inflow of FDI during this period amounted to $1.46 billion, compared to $1.94 billion in the preceding fiscal year.

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While FDI saw a decline, foreign private investment in the stock market showcased substantial improvement. Foreign portfolio investment witnessed a surge of 95%, as the outflow decreased to $18.2 million during the fiscal year 2022-23, compared to $388 million in the previous fiscal year.

However, Pakistan experienced a 7.2% decline in foreign private investment, which amounted to $1.44 billion during the fiscal year under review, in contrast to $1.55 billion in the preceding fiscal year.

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In terms of foreign public investment, there was a significant outflow of $1.01 billion during the year under review, as compared to an inflow of $310 million in the fiscal year 2021-22.

The decline in FDI inflows raises concerns about Pakistan’s ability to attract foreign investment and promote economic growth. Factors such as geopolitical uncertainties, regulatory challenges, and the impact of the global economic environment may have contributed to this decline.

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Despite the FDI setback, the significant improvement in foreign portfolio investment indicates growing investor confidence in the country’s stock market. Efforts to enhance market transparency and facilitate foreign investors may have played a role in this positive trend.

The outflow of foreign public investment reflects a shift in investment strategies and risk perceptions. It underscores the need for the government to implement measures that address concerns and create an enabling environment to attract foreign investment in public sectors.

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As Pakistan seeks to promote economic stability and growth, it will be crucial to address the challenges impacting FDI inflows. This could involve measures to streamline regulatory processes, enhance investor protection, and promote economic reforms to attract long-term foreign investment.

The government and relevant authorities will closely monitor these investment trends and work towards creating a conducive environment to attract both FDI and foreign portfolio investment, which will contribute to the country’s economic development.