Foreign direct investment doubles to $222m on inflows from China, Japan

Following a net divestment in December 2022, foreign direct investment (FDI) increased significantly in January, rising from $110 million to $222 million.

The most recent data from the State Bank of Pakistan, released on Monday, revealed that FDI increased mostly due to inflows from China and Japan.

FDI inflows decreased 44.2 percent to $683.5 million during the first seven months of this fiscal year compared to $1.22 billion during the same period the previous year as a result of ongoing political and economic uncertainty.

Given that there was a net outflow of $17 million in December 2022, the FDI inflows in January were positive. Nonetheless, almost 57% of all FDI in January came from the two countries, China ($68.4 million) and Japan ($59.7 million).

Investment inflows from China and Japan totaled $200.2 million and $134 million, respectively, in the first seven months. Switzerland ($106m) and the UAE ($83m) contributed other sizeable inflows throughout the time frame. The largest net outflow, however, of $231 million, was recorded from Australia in 7MFY23.

While the nation continues to experience political and economic uncertainty, experts do not hold out much hope for higher FDI. The PMLN-led coalition government's top minister recently claimed that Pakistan had already defaulted, sending a negative message to the entire globe.

In actuality, Pakistan has not yet declared a sovereign default, which means that no banks' or nation's foreign payments have been postponed.