Foreign Direct Investments Down By 21% in 11 Months of FY23

Foreign Direct Investment (FDI) has shrunk by 21 percent year-on-year (YoY) in the current fiscal year (FY) between July to May amid persistent economic uncertainty. Pakistan pulled in $1.32 billion during July-May 2023, $345 million lower compared to $1.66 billion in 11MFY22, according to data released by the State Bank of Pakistan on Tuesday. Meanwhile, FDI is up 6 percent YoY to $149 million in May 2023 against $141.2 million in May 2022. FDI inflows witnessed a 19 percent decline to $1.94 billion. Likewise, outflows are also down by 15 percent to $629 million. Pakistan is under serious economic turmoil with IMF 9th Review stuck since November last year and no meaningful negotiations happening. State Bank reserves are historically low, friendly countries have rolled over the loans but no fresh financing is on the horizon. On the other hand, Government has curbed the economic growth to negative in a bit to show a current account surplus, but the practices are seemingly failing to spark investors’ confidence. Foreign portfolio investments have reported a negative $15 million outflow during 11MFY23 but still lower than the last year’s outflow of $376 million. Total foreign investments which are foreign direct investments, foreign public investments, and portfolio investments are down 82 percent to $294 million in July-May 2023 against $1.655 billion in the corresponding period last year.