Foreign Direct Investment Dropped by 20.3% in July-August 2021

Pakistan’s foreign direct investment fell by 20.3 percent year-over-year to $203.1 million in July and August due to pandemic-linked travel restrictions and political instability in Afghanistan.

The foreign direct investment (FDI) dipped from $254.8 million in the corresponding period of FY 2021, according to data released by the State Bank of Pakistan (SBP).

Pakistan drew in $113.2 million in August 2021 as compared to $126.1 million in the same month last year.

The power sector attracted the most investment in the first two months of FY 2022, which was $85.8 million, as compared to $62 million in the same period of FY 2021. It was followed by the communication sector that won $46 million in FDI as compared to $10.7 million.

In contrast, the petroleum, transport, chemical, and construction sectors had decreased investments.

China was Pakistan’s largest investor during the first two months of FY 2022 — invested $53.9 million, which was 32 percent higher than the $40.8 million registered in the same period last year.

The US followed China, with $32.2 million invested in July and August 2021, as compared to $15.4 million in July-August 2020.

Meanwhile, the UK decreased its FDI by 9.85 percent year-over-year to $18.8 million in the period under review.

Muzammil Aslam, an economist, told The Express Tribune that the pandemic’s restrictions and consequences, and the recent political transition in Afghanistan have discouraged foreign investments.