KARACHI: The influx of foreign direct investment (FDI) into Pakistan has plummeted by 35 percent during the first nine months (July – March) of the fiscal year 2020/2021, as per data released by the State Bank of Pakistan (SBP) on Monday.
According to the SBP data, the country received $1.39 billion in foreign direct investment during the initial nine months of the current fiscal year, contrasting sharply with the $2.15 billion recorded in the corresponding period of the preceding fiscal year.
The total foreign private investment also witnessed a substantial decline of 44.8 percent, totaling $1.13 billion during the same period of the current fiscal year compared to $2.04 billion in the corresponding months of the previous fiscal year.
Among the components of foreign private investment, portfolio investment observed a significant outflow during the review period. Portfolio investment saw an outflow of $265 million from July to March 2020/2021, in contrast to an outflow of $103.6 million in the corresponding period of the last fiscal year.
Moreover, foreign public investment also experienced an outflow of $3.5 million during the period under review, a notable shift from the $331 million inflow recorded in the same period of the preceding fiscal year.
The decline in FDI and foreign private investment paints a concerning picture for Pakistan’s economy, indicating potential challenges in attracting international capital. Factors contributing to this decline may include global economic uncertainties, geopolitical tensions, and domestic economic conditions.
Such a significant decrease in FDI and foreign private investment could impact various sectors of Pakistan’s economy, including infrastructure development, job creation, and technological advancement. It underscores the importance of implementing policies to enhance the country’s investment climate, improve ease of doing business, and address investor concerns.
Efforts to attract foreign investment are crucial for Pakistan’s economic growth and development aspirations. To reverse this downward trend, policymakers may need to reassess investment strategies, offer incentives for foreign investors, and create a more conducive environment for business activities.
As the global economic landscape continues to evolve, it becomes imperative for Pakistan to adapt and implement measures to remain competitive in attracting foreign investment and fostering sustainable economic growth.
