The recent data released by the central bank shows that FDI in the country during December 2023 jacked up by 60 percent month-on-month, and by over six times on a year-on-year basis. Overall, during the first six months of FY24, FDI in the country stood at $863 million with a growth of 35 percent year-on-year. However, before one can celebrate the growth in FDI for Dec-23, it must be known that the net FDI growth comprised of no growth in FDI inflows and a significant decline in FDI outflows.
Country-wise, China continued to be the largest foreign investor in Pakistan – though its share has been declining over time when compared to the peak CPEC era. China with a share of around 34 percent in 1HFY24 FDI, saw its contribution come down by around 12 percent in 1HFY24 versus 1HFY23. The key contributors to FDI in 1HFY24 were Hong Kong which saw its FDI to Pakistan rise on a year-on-year basis, while FDI from the UK remained more or less the same during the period.
Challenges for FDI in the country remain. The global investment landscape right now is as tricky as it could get. While GlobalData’s greenfield FDI projects database showed that the greenfield FDI projects were expected to be lower by one-fourth in 2023, the investment landscape is still categorized for cautious optimism in 2024. In the new year, the key inclinations that will decide the growth route for global FDI will be based on the ongoing (and escalating) geopolitical conflicts; global growth and inflation; increased readiness towards artificial intelligence and big data; climate change, sustainability and focus on renewable energy, etc. All these leave the investment environment volatile; and for a country like Pakistan that is already grappling with structural challenges and internal instability, attracting investors will be an uphill task.
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