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FDI shrinks by 59% to $461m in first six months of FY 2023

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2 years ago

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  • Financial sector fetches $176 million in FDI from global investors.
  • Investment in power sector falls to $237 million from $345 million.
  • Pakistan among least desired moneymaking markets for investors due to ‘deteriorating’ economy.

KARACHI: Pakistan’s foreign direct investment (FDI) shrank by 59% to $461 million in the first six months of the current fiscal year, the State Bank of Pakistan (SBP) data showed on Wednesday.

The country witnessed a net foreign outflow of $17 million during December.

The financial sector fetched $176 million in FDI from global investors in July-December of the ongoing fiscal, which was lower when compared with $230 million in the corresponding months of the last fiscal year, the data showed.

The investment in the gas and exploration sector dropped to $89.2 million in July-December from $138.9 million a year earlier.

The investment in the power sector fell to $237 million from $345 million.

The shrinking of the FDI is not a positive development for the country. The International Monetary Fund (IMF) programme’s delay, continuous political unrest, and Pakistan’s deteriorating external finances have all reduced international investors’ confidence.

Due to rapidly dropping foreign exchange reserves, a weakening rupee, and worsening macroeconomic indicators, Pakistan’s economy is currently in a severe crisis.

The economy is severely cash-strapped following a disagreement with the IMF over tax goals that is preventing loan payments from being made.

The situation worsened as a result of floods that inundated a third of the nation and cut its growth in half.

Analysts said dollar outflows and the deteriorating state of the economy have made the country one of the least desired moneymaking markets for foreign investors, with the repatriation of profits on foreign investments falling by 83.41% year-on-year in July-November of the current fiscal year 2022-23. 

The central bank data showed paid profits from foreign investments in the country fell to $128.7 million in the first five months of FY23, down from $776 million reported in the corresponding fiscal year.

The economy is in virtual recession as the World Bank has projected growth of 2%, is about the same as population growth, for the current fiscal year, citing “precarious economic situation, low foreign exchange reserves and large fiscal and current account deficits” among the primary reasons.

There are also security concerns for investors as the country battles a Taliban insurgency in its northwest. There have been outflows from the stock market because of political uncertainty and economic and security worries.

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In interbank trade, the Pakistani rupee beats the US dollar.

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6 days ago

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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1 week ago

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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The inflation rate in Pakistan dropped to its lowest level.

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1 week ago

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On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.

The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.

Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.

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