Pakistan Net FDI falls 61pc YoY in December 2020

Pakistan Net FDI falls 61pc YoY in December 2020

KARACHI: Pakistan’s Net Foreign Direct Investment (FDI) for December 2020 came in at $194 million, a 61 percent drop from the corresponding month of the previous fiscal year, according to Topline Research.

Net FDI for the first half of the fiscal year 2020-21 was down 30 percent at $953 million compared to the same period in the previous fiscal year, while net FDI for 2020 as a whole was down 3 percent from the previous year at $2.16 billion.

The numbers are arguably fresh signs of the continuing negative economic impact of COVID-19, with the second wave of the pandemic dampening investor confidence as we enter the new year. A worrying component of the latest slowdown is declining Chinese firms’ investment into projects under the China-Pakistan Economic Corridor (CPEC) umbrella. Data from the State Bank of Pakistan (SBP) shows net FDI from China slipping to $358.9 million in the first half of the current fiscal year from $395.8 million in the first half of the previous fiscal year.

In recent years, China has funded a slew of infrastructure projects under the CPEC banner as part of its Belt and Road Initiative (BRI) to boost regional trade and inter-connectivity and remains Pakistan’s largest foreign investor. Foreign investment in Pakistan has traditionally been centered on non-export oriented sectors such as power, construction, telecommunications, and oil & gas.

As the CPEC enters its second phase, several Special Economic Zones are to be established, hoping that increasing investment from China will help expand Pakistan’s export base. However, with Covid taking its toll, it might be a while before these ambitions are realised.

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