Karim Madad

Pakistan received $58.9 million Foreign Direct Investment (FDI) in July 2022 as compared to $103.8 million in the same month of last year, depicting a decrease of 43.3%, according to a latest report of the Finance Ministry.

On month-over-month (MoM) basis, the FDI was recorded at $58.9 million in July 2022 as against the inflow of $271.1 million in June 2022.

The FDI received from the United Arab Emirates (UAE) was $12.6 million (21.5% of total FDI), Switzerland $11.5 million (19.6%), Germany $6.5 million (11%), the Netherland $6.3million (10.6%), and China $4.6 million (7.7%) during the period under review.

The report showed that the power sector attracted the highest FDI of $30.6 million (51.9% of total FDI), financial business $27.7 million (47%), and communication $10.6 million (17.9%) during this period. Foreign private portfolio investment registered a net inflow of $3.7 million in July 2022, while foreign public portfolio investment recorded a net outflow of $17.7 million. The total foreign portfolio investment recorded an outflow of $13.9 million, total foreign investment was recorded at $44.9 million in July 2002.

The report showed that workers’ remittances in the first month of FY 2022-23 were recorded at $2.5 billion as compared to $2.7 billion in the same month of last fiscal year, a decrease by 7.8%, and have continued to remain above the $2 billion mark since June 2020.

On MoM basis, remittances decreased by 8.6% in July 2022 as compared to June 2022 ($2.7 billion). This decrease largely reflected the lower number of working days in July because of Eid celebrations. Share of remittances in July 2022 from Saudi Arabia remained 23% ($580.6 million), UAE 18.1% ($456.2 million), the UK 16.3% ($411.7 million), the US 10.1% ($254.3 million), other GCC countries 11.1% ($280.6 million), EU 11.7% ($294.4 million), Malaysia 0.5% ($11.4 million), and other countries 9.2%.

Regarding the economic outlook of the country, the Finance Ministry report said that it is surrounded by global and domestic uncertainties. Geopolitical tensions remain unabated, worldwide inflation remains high, interest rates show tendencies to rise, and the US dollar is also strengthening. Pakistan’s external environment is therefore facing increasing challenges. Domestically, the government has taken necessary measures to comply with the IMF (International Monetary Fund) requirements. These have further increased inflation, but also have the positive effect of alleviating the external financing constraints.

Recent floods caused by abnormally heavy monsoon rains have adversely affected important and minor crops which may impact the economic outlook through agriculture sector performance. The report further said that inflation had been accelerating drastically in June and July. The main drivers were seen to be the pass-through of high international commodity prices and exchange rate depreciation into domestic retail prices.

On the other hand, during the last 12 months, money supply growth was compatible with a low and stable inflation rate. But the recent supply shocks have brought inflation to a level much higher than one year ago, the report said.

Credit : Independent News Pakistan-WealthPk