According to the data released by the State Bank of Pakistan (SBP), foreign direct investment (FDI) stood at $222.6 million in January 2023, registering a massive Year-on-Year growth of 2 times compared to $109 million in January last year. The SBP’s latest data showed that FDI improved mainly on inflows from China and Japan.
Due to persistent political instability and economic uncertainty, the FDI inflows plunged 44.2 % to $683.5 million during the first seven months of the current fiscal year against $1.22 billion last year.
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Moreover, the January inflows were encouraging since December 2022 noted a net outflow of $17 million. However, the inflows from China ($68.4 million) and Japan ($59.7 million) accounted for over 57 % of the total FDI in January.
During the first seven months, the investment inflows from China and Japan were $200.2 million and $134 million, respectively. In addition to this, inflows from Switzerland ($106 million) and UAE ($83 million) also contributed to the FDI in Pakistan. On the other hand, the biggest net outflow of $231 million was noted from Australia in 7MFY23.
Tahir Abbas, the Head of Research of Arif Habib Limited( AHL) was of the view that the inflows during the month of January came mainly in the power and food sectors.
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He said;
“Net foreign direct investment settled at $223 million in January 2023, highest net inflow after seven months”
Furthermore, the power sector attracted $78.1 million with $58.4 million going toward coal-based projects. Likewise, the food sector also contributed $56.9 million in investment and financial business with $48.7 million.
On the contrary, mining and quarrying space saw divestment of $232.1 million in the seven months against the previous fiscal year. Similarly, the communications sector also declined by $93 million and the electronics sector saw a divestment of $30.1 million.
Experts see no hope for higher FDI since the country is still facing political and economic instability, and the country is on the verge of default.
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