Foreign direct investment to Pakistan slows down to an eight-month low

The net foreign direct investment (FDI) being directed to various sectors of Pakistan’s economy, including energy, telecommunications and banking, has slowed down to an eight-month low. As of July 2021 – the first month of the current fiscal year 2021-22 – the figure stands at $89.9 million. 

As reported by The Express Tribune, this drop in FDI can be attributed in part to a temporary lull in the second phase of the China-Pakistan Economic Corridor (CPEC) and Belt Road Initiative that was observed this month.  

The gross inflows of FDI amounted to $176.3 million in July 2021 which was partially higher compared to $168.7 million recorded in the same month last year. However, the gross outflows more than doubled to $86.4 million in the month under review compared to $40 million in the corresponding month last year. According to the State Bank of Pakistan’s (SBP) data that was mentioned in the report, the net inflows dropped to an eight-month low at $89.9 million. 

In terms of FDI specifics in July 2021, Singapore has been the single largest investor in Pakistan over the course of the month. It invested $16.4 million in the month compared to net $2.3 million in the same month last year, according to the SBP data.  

United States, meanwhile, emerged as the second largest investor with net $14.9 million in the month under review compared to net $11.5 million in the corresponding month last year. 

Hong Kong invested $12.3 million in the month compared to $4.7 million in the same month last year. China, which was the leading investor with a net investment of $44.1 million in July 2020, poured $6.6 million in July 2021 after a significant outflow of $15.2 million in the month. 

Speaking sector-wise, the power sector has amassed the single largest investment in July 2021 ($41.9 million), followed by financial business ($27 million), and the oil and gas exploration sector ($22.4 million).