15.4 percent drop in foreign investment

15.4 percent drop in foreign investment

KARACHI  (January 15, 2011) : Foreign investment in the country slumped by 15.4 percent during the first half of current fiscal year 2010-11 because of economic slowdown. "Although the net foreign investment is in negative position, yet it crossed $1 billion mark, which is an encouraging figure. The first half year's investment is also much better than first five months' statistics, which were depicting a decline of 28.4 percent during July-November 2010", an economist said.

He said that some improvement on foreign investment front was a positive sign for the country's economy and it was expected that if the upward trend continued then it would surpass last fiscal year's figure.

The State Bank of Pakistan (SBP) on Friday said that net foreign investment had dropped by 15.4 percent during the first half (July-Dec) during of current fiscal year. Net inflows of foreign investment in Pakistan reached $1.05 billion mark in first half of fiscal year 2010-11 against $1.241 billion in corresponding period of fiscal year 2009-10, depicting a decline of $164 million.

Foreign direct investment (FDI) posted a decline of 14.5 percent during the first half of current fiscal year 2010-11. According to SBP, FDI slumped by $140.4 million to $828.5 million in July-December of current fiscal year as compared to $968.9 million in same period of last fiscal year.

Although the country's equity market is continually on positive side and KSE-100 index has crossed 12,000 points mark, the portfolio investment was still on decline and registered a decrease of 18.6 percent in July-December 2010.

Overall portfolio investment stood at $221.5 million in first half of fiscal year 2010-11 relative to $272.1 million in corresponding period of fiscal year 2009-10, depicting a decline of $50.6 million.

Economists said that after global economic meltdown multinational investors across the world adopted wait and see policy, due to which foreign investment and FDI are on decline. "Although the global economic meltdown is also a reason of slow growth in FDI, the domestic shocks are major contributors in the declining trend of foreign investment," they said.