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Saturday, September 25, 2021

In July, foreign direct investment fell by 38.7 percent.

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Inflows from China are much lower than the previous year.

KARACHI: FDI dropped 38.7% in July FY22 compared to July FY21, continuing the previous fiscal year’s pattern.

The latest State Bank statistics revealed that FDI inflows were just $90 million in July, compared to $128.7 million in the same month last year.

The start of the new fiscal year saw a decline of 29% from the previous fiscal year’s $1.847bn.

The statistics also indicate a significant drop in Chinese entrants from previous year. China sent $6.6m to Pakistan in July, compared to $44.1m in July FY21. July’s drop of nearly 38% is due to weak intake. For many years, China has been the biggest investor. No other nation invested for five years like China.

Singapore had the largest influx of $16.6m, compared to $3.2m in July last year. Hong Kong likewise saw a rise in inflows, from $4.6m in July FY21 to $13.2m this year.

The US inflow was $14.1m in July, compared to $39.2m in July FY21. Inflows from the UK increased to $8.5m from $20.7m in the preceding year. UAE FDI dropped to $6.6m from $27.6m in July last year.

Experts think that owing to Afghanistan’s insecurity, international investment would continue to decline. Investors would wait for Kabul to calm down.

Investors fearing a spillover effect from an unclear scenario in Afghanistan slashed Pakistani dollar-denominated bonds by 1.6% on Monday. Afghanistan’s trade has already slowed in recent weeks.

Afghanistan exports rose to $983m in FY21 from $890m in FY20. In FY19, it was $1,192m, indicating a drop in exports. Afghanistan’s imports rose to $179m from $121m in FY20 and $170m in FY19.

The country’s overall foreign private investment rose by 60% in July FY22 owing to minimal outflows of foreign portfolio investment. A $88.8 million increase over July FY21’s $55.5 million. Portfolio investment outflows were $1.1m in July against $73.2m last year.

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