Pakistan's FDI falls to 11-month low level

The flow of foreign investment into different sectors of Pakistan's economy, such as power plants, oil and gas exploration and IT and telecommunication, slowed down to an 11month low of $114.3 million in July 2020.

"Foreign direct investment (FDI) numbers are not impressive. They will grow gradually along with normalisation of economic activities globally," Topline Securities Director Research Syed Atif Zafar said while talking to The Express Tribune.

The FDI is 35% lower compared to $174.8 million received in the previous month of June 2020. The number, however, surged over 60% against $ 71.1 million recorded a year ago in July 2019, the State Bank of Pakistan reported. The surge in investment over the one-year period is seen due to massively low FDI in July 2019.

Many economies around the world, particularly the developed ones, which pour in investment in developing countries like Pakistan, have yet to fully recover from Covid- 19 impact and lockdown. UK - which was the second largest foreign investor in Pakistan in the recent past - reported in mid-June that its economy shrunk by a record 20% in April 2020.

"The FDI is higher on a year-on-year basis, but still lower compared to the average of $ 250- 300 million during the pre- Covid- 19 period," Zafar said. Pakistan has reopened its economy from the lockdown. Majority of the sectors in manufacturing and almost entire agriculture sector are operational now.

"The thing is that FDI comes from abroad. So we have to wait for other countries to open up accordingly as well," he said. Covid-19 has badly hit financial health of people and businesses globally in the last four to six months.

"They (foreign i nvestors/ multinational firms) will take more time to stabilise financially and then shift their focus towards making new investment in developing countries like Pakistan," he added.