FDI falls 8% to $1.97bn in July-May

KARACHI: Pakistan’s net foreign direct investment (FDI) dropped 8.0 per cent to $1.979 billion in 11 months of the current fiscal year, the central bank data showed on Monday.

The country saw an FDI inflow of $193.9 million in May, marking a 37 per cent decrease compared to the same month last year. However, there was a significant increase of 38 per cent in investments compared to the previous month.

China remained the largest source of FDI, with investments from the mainland rising to $790.4 million from July to May of FY25, up from $598.6 million during the same period a year earlier.

Sector-wise, cross-border investments in the financial sector increased to $628.9 million from July to May FY25, compared to $570.4 million in the same timeframe last year. Conversely, FDI inflows in the power sector decreased to $562.8 million, down from $613.2 million last year, indicating a decline in investments in energy-related projects. The oil and gas exploration sector experienced a drop in FDI inflows, totalling $265.6 million over the 11 months of the fiscal year, compared to $320.8 million a year ago.

Pakistan’s Economic Survey for FY24-25, published last week, said that a key reason for a decline in Pakistan’s FDI was heightened global risk aversion, with investors shifting capital towards safer markets amid geopolitical tensions and economic uncertainty.

“Another key reason was the slowdown in global trade and investment flows, affecting developing economies, as multinational firms scaled back expansion plans,” it said.“Furthermore, China’s outbound investments declined, reducing FDI inflows to economies like Pakistan, which historically benefited from Chinese investment,” it added.