KARACHI: Pakistan’s foreign direct investment (FDI) fell 59 percent to $461 million in the first six months of the current fiscal year, State Bank of Pakistan (SBP) data showed on Wednesday. What did
During December, the country saw a net foreign outflow of $17 million.
Data shows that the financial sector received FDI of $176 million from global investors in July-December of the current fiscal year, down from $230 million in the same months of the previous fiscal year.
Investments in the gas and exploration sector fell to $89.2 million in July-December from $138.9 million a year ago.
Investment in the power sector decreased from $345 million to $237 million.
Shrinkage of FDI is not a positive development for the country. International Monetary Fund (IMF) program delays, continued political unrest, and Pakistan’s deteriorating external finances have eroded international investor confidence.
Pakistan’s economy is currently in dire straits due to rapidly depleting foreign exchange reserves, a weakening rupee, and worsening macroeconomic indicators.
The economy is severely cash-strapped after a disagreement with the IMF over tax targets is holding back debt payments.
The situation was worsened by floods that submerged a third of the country and halved its development.
Analysts say dollar outflows and a deteriorating economy have made the country one of the least desirable money-making markets for foreign investors, with returns on foreign investments up to the current July. In November, it has decreased by 83.41% year-on-year. Financial year 2022-23.
Central bank data showed that in the first five months of FY23, dividends paid by foreign investors in the country fell to $128.7 million, down from $776 million in the same fiscal year. .
The economy is in a virtual recession as the World Bank forecasts growth of 2 percent, roughly the same as population growth, for the current fiscal year, due to “unusual economic conditions, low foreign exchange reserves and large financial and Current Account Deficit” refers to the main reasons.
There are also security concerns for investors as the country battles a Taliban insurgency in its northwest. Due to political uncertainty and economic and security concerns, stocks have withdrawn from the market.
