KARACHI: The country saw a net outflow of $17 million in foreign direct investment (FDI) in December, official data showed on Wednesday, with investment coming into the country plunging 59 per cent in the second half of 2022.

December’s overall outflow mainly came on the back of a $230.1m outflow to Australia, $88.4m to Norway, $33.6m to the United States, and $24m to the UK.

It was in stark contrast to an inflow of $229.8m in December 2021, according to the State Bank of Pakistan (SBP). It was the first time the monthly net FDI was in the negative since March when the outflow was $30m.

In July-December, net FDI dropped 59pc to $461m, as inflows shrank to $932.5m while outflows jumped to $471.6m. FDI was $1.115 billion in the same half a year ago, comprising $1.43bn inflows and $319m inflows.

Net inflows more than halve to $461m in July-Dec

The net outflow of FDI reflects a grim picture of an economy already crushed by growing political and economic instability. The coalition government that came to power in April has been struggling to resolve crises, which have been only growing in both number and intensity.

Independent economic experts say the government must find a quick solution before the economy hits rock bottom.

The FDI has been on the decline since August. Domestic investments have also shrunk during the ongoing fiscal year, which is another reason for poor FDI since foreign investors keenly watch domestic growth in investments.

The SBP data shows that FDI amounted to $78.5m in July, increased to $116.1m in August before taking a dive and fell to $94.4m in September, $91.5m in October, and $82.6m in November.

Besides FDI, foreign currency inflows sent by overseas Pakistanis through the Roshan Digital Account (RDA) have also dropped, amounting to $140m in December, the lowest since December 2020.

“Maybe foreign investors are also waiting for a green signal from the IMF. The country must improve its image regarding the foreign exchange reserves, which have dropped to a near nine-year low,” a senior banker said.

Published in Dawn, January 19th, 2023

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.