Islamabad, Jan 17: Foreign Direct Investment (FDI) dynamics reveal critical insights into the economic landscape of a country. In December 2024, net FDI stood at $170 million, reflecting a decline of 33% compared to $252 million recorded in December 2023. While FDI inflows for the month reached $244 million, this figure represented a 16% drop from the $289 million inflows observed in December 2023. Meanwhile, outflows surged significantly to $74 million, marking a 101% increase from $37 million in December 2023.
Growth in 1HFY25 FDI Despite Monthly Decline
Despite December’s dip, the overall performance during the first half of FY25 (1HFY25) presented a more optimistic picture. Net FDI inflows during this period reached $1.32 billion, showcasing a robust 20% growth compared to $1.1 billion recorded in 1HFY24. This reflects investors’ sustained interest in key sectors and highlights the country’s improving investment climate.
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Key Contributors to FDI Inflows
Geographically, China emerged as the largest contributor, channeling $536 million in FDI during 1HFY25. Other major contributors included Hong Kong with $134 million, the United Kingdom at $130 million, Switzerland at $100 million, and Canada with $32 million in inflows. This diverse range of investors underscores the global confidence in the country’s economic potential.
Sector-Wise Analysis: Powering Growth
In terms of sectoral distribution, the power sector was the top recipient of Foreign Direct Investment during 1HFY25, attracting $488 million. Financial businesses followed closely, securing $353 million in investments, while oil and gas exploration garnered $167 million. These sectors remain pivotal in driving growth and fostering investor confidence, thanks to ongoing policy reforms and strategic infrastructure development.
A Mixed Outlook
While the decline in December’s figures raises questions about short-term fluctuations, the significant YoY growth in 1HFY25 reflects a steady recovery and resilience in the investment landscape. Strategic initiatives targeting economic stability, coupled with favorable policies, could further bolster FDI inflows and enhance investor confidence in the coming months.
