FPI Outflows Drag FDI To Negative Growth in Pakistan

The continuous outflow of investment in the equity market in wake of a bearish trend has dragged down the net Foreign Direct Investment (FDI) towards a negative growth of 1.5 percent in the first fiscal quarter of 2017-18.

According to the State Bank of Pakistan (SBP), the net FDI landed in Pakistan was recorded at $534.1 million in the period of July to September 2017 as against of $541.7 million in the corresponding period of last year.

In the first quarter, the outflow of Foreign Portfolio Investment (FPI) was registered mainly through equity securities and debt securities amounting to $78.2 million and $49.6 million respectively.

The statistics of SBP stated that FDI, in the real sector, has seen a significant growth in the first quarter of 2017-18 reaching $661.9 million, that is, 53.6 percent higher than numbers from the previous financial year.

Hence, the net outflow of $127.8 million has minimized the overall growth of the net FDI which comes from real sectors.

It is pertinent to mention here the net FDI in Pakistan recorded a growth of 37 percent in the two months of the current financial year to stand at $301 million, which showed the month of September was not good for the country in terms of FDI especially due to the heavy outflow of Foreign Portfolio Investment (FPI).

However, the overall outflow of FPI under its head sustained the net FDI at the level of $534.1 million, which is slightly lower than last year.

The investment in real sectors is gradually increasing once again in Pakistan with the expansion and advancement of infrastructure in different cities.

FDI From Different Countries and Sectors

Like previous months, China is the biggest contributing country with FDI of $429.8 million in the months of July to September.

FDI from Malaysia was recorded at $110 million in the said period while the net FDI from USA was also significant with a value of $286.2 million mainly in the portfolio investments.

Power sector received $268 million and construction sector got $123 million among the real sectors with major investments.



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