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FDI jumps 90.6pc to $2.401bln in 11 months

By Our Correspondent
June 20, 2020

KARACHI: Foreign direct investment in Pakistan surged 90.6 percent in 11 months of the current fiscal year from a year earlier, central bank data showed, aided by large inflows in the power and the communications sectors.

Pakistan drew $2.401 billion in FDI in July to May FY2020, compared with $1.259 billion in the same period last year.

However, direct investment totalled $120 million in May, down 52.75 percent from a corresponding month of the last fiscal year. FDI stood at $254 million in May 2019.

Analysts said the July-May FDI shows overseas investors are still optimistic on the outlook of Pakistan's economy even as growth slows owing to the impacts of the coronavirus pandemic.

However, a month-on-month decline in the cross border investments in May revealed that the virus pandemic has started taking toll on the FDI flows to Pakistan. The widespread virus outbreak disruptions and demand shocks have severely impacted the operations of multinationals and FDI flows.

FDI in the power sector attracted $749.6 million foreign capital in July-May FY2020. However, investors pulled out $324.5 million from this sector in the same period of FY2019.

The increase in the FDI in energy companies is driven by ongoing work on CEPC-related projects, especially in the thermal and coal-fired projects.

Communications sector inflows in July-May stood at $583.8 million, while the communications’ businesses saw an outflow of $52.9 million Las year.

Net FDI from China increased 695 percent to $855.6 million, while investments from Norway increased 212.6 percent to $346 million.

Foreign funds managers pulled $289.3 million from the government securities such as treasury bills and Pakistan Investment Bonds in July-May FY2020. That compared with $1.0 billion outflows in the same period of FY2019. Outflows from the stock market stood at $238.5 million, compared with $392.1 million last year.