36 percent decline in foreign investment

[LahoreEstate]

RECORDER REPORT
KARACHI (April 16 2009): Foreign investment during nine months of current fiscal year (July-March period) declined by 36 percent mainly due to global economic slowdown, the countrys poor economic indicators, and unstable law and order situation. Massive outflow from portfolio investment, in the wake of uncertainty on political front also played a major role in the massive decline in overall foreign investment.

The State Bank on Wednesday said that net foreign investment, comprising foreign direct investment (FDI) and portfolio investment, had been constantly on decline and registered a decline of $1.1682 billion during the July-Mach period of current fiscal year.

Overall net foreign investment amounted to 2.0846 billion dollars during this period as compared to 3.2528 billion dollars in the same period of last fiscal year. "After the global economic recession, foreign investors are reluctant to invest in countries like Pakistan, where economic indicators are presenting poor performance," economists said.

MAJOR REASON BEHIND THIS DIP: They said that rising outflow from portfolio investment was a chief reason behind current dip in foreign investment as the foreign investors were quickly pulling out their investment from equity market due to political uncertainty. However, they added that despite negative reports on Pakistans economy, over $3 billion foreign direct investment (FDI) in nine months was also a positive sign for the economy.

Foreign direct investment (FDI) during July-March has decline by 8 percent, but the massive outflow from the equity market posted a decline of 1703 percent in portfolio investment. Overall FDI stood at 3.0421 billion dollars during nine months of fiscal year 2009 as compared to 3.3059 billion dollars in corresponding period of last fiscal year 2008, depicting a decrease of 263.8 million dollars.

Portfolio investment also stood in a negative position of 957.5 million dollars during this period. Total private investment, including privatisation proceeds, shows a decline of 19.5 percent to 2.6237 billion dollars during July-March of fiscal year 2009, which previously stood at 3.2603 billion dollars. Without privation proceeds, private investment stood at 2.6237 billion dollars with a decline of 16 percent in nine months.

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