KARACHI: Pakistan has experienced a significant decline of 75 percent in total foreign investment, amounting to $1.042 billion during the period of July to January in the fiscal year 2018/2019, according to the State Bank of Pakistan (SBP).
This figure represents a considerable decrease from the $4.138 billion recorded in the corresponding period of the last fiscal year.
The decline in total foreign private investment is also noteworthy, dropping by 38.2 percent to $1.042 billion during the first seven months of the current fiscal year compared to $1.687 billion in the corresponding months of the previous fiscal year. The data highlights a challenging economic environment, both globally and domestically, influencing investor sentiment and impacting foreign investment inflows.
Breaking down the foreign private investment further, foreign direct investment (FDI) experienced a decline of 17.6 percent to $1.45 billion during July to January 2018/2019, in contrast to the $1.76 billion recorded in the corresponding period of the last fiscal year. The decrease in FDI reflects the challenges faced by Pakistan in attracting sustained long-term investment.
A notable aspect of the data is the sharp decline in investment into the equity market, with a staggering 454 percent decrease resulting in an outflow of $409 million during the first seven months of the current fiscal year. This is in sharp contrast to the outflow of $74 million in the same period of the last fiscal year. The substantial negative change in equity market investment points to a lack of confidence among foreign investors, possibly influenced by uncertainties in the global economic landscape and domestic economic challenges.
It’s essential to note that the data includes the inclusion of debt instruments worth $2.45 billion, which were taken during the last fiscal year. This inclusion has contributed to the overall foreign investment figures but does not necessarily indicate fresh investment inflows. It is crucial to distinguish between equity and debt investments, as they represent different financial instruments and have distinct implications for the country’s economic dynamics.
The decline in foreign investment is a matter of concern for Pakistan’s economic policymakers, as attracting foreign capital is critical for sustaining economic growth, infrastructure development, and job creation. Factors contributing to the decline may include geopolitical tensions, economic uncertainties, and policy-related challenges.
The government’s response to this decline will be closely monitored, as policymakers may explore measures to improve the investment climate, address investor concerns, and implement reforms that promote foreign direct investment. Building investor confidence and creating a stable and attractive investment environment are crucial for reversing the current trend and fostering a more robust and sustainable foreign investment landscape in Pakistan.
As the country moves forward, strategic efforts to enhance the ease of doing business, implement investor-friendly policies, and address economic challenges will be instrumental in revitalizing foreign investment inflows and promoting a more resilient and dynamic economy.
