Foreign Direct Investment (FDI) in Pakistan declines 35.1% in financial year 2020-21

 Decline in FDI is mainly due to COVID-19 pandemic and world economic crisis

According to data released by the State Bank of Pakistan (SBP), the FDI fell by 35.1% to $1.395 billion during July-March FY21 compared to $2.15billion in the same period of last fiscal year. The data showed a decline of 40%, as the inflow in March was just $167.6 million compared to $278.7 million in the same month of last year.

However, as the inflow in March this year slightly improved compared to February when the inflow was $155 million, the FDI trend shows that the overall trend is on the decline.

The State Bank of Pakistan’s figures disclosed that FDI inflows from China and Hong Kong and Netherlands declined from a year earlier, and those from the United Kingdom increased in July-March current financial year 2020-21. Inflows from Netherlands also declined to $65.4 million from $84 million.

The net FDI inflows from China went down to $650.8 million in July-March Financial year 2021 from $859.3 million a year ago and from Hong Kong they declined to $105.7 million from $135.1 million. In July-March FY 2020-21, oil and gas explorations inflows were $158.3 million which down from $218.3 million a year earlier.

The investment from China to finance the energy projects under the China Pakistan Economic Corridor (CPEC) slowed down, despite the power sector being the largest recipient of FDI. FDI in the power sector declined to $737.8 million in July-March FY 2020-21 from $742.4 million a year ago.

Telecommunications sector managed to pull $62.6 million FDI from the country in the nine months of this fiscal year, compared with an inflow of $464.8 million last year. Analysts believe that FDI in Pakistan has gone down due to the new waves of coronavirus pandemic which has slowed down the world economy.

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