- Coming months will not post similar results
Pakistan’s FDI jumped 137% to $2.1 billion in the first nine months of the current fiscal year with March faring particularly well, posting a 92 percent increase as compared to last year, owing to an investment of $202 million in the energy sector under the CPEC (China Pakistan Economic Corridor) from China which accounts for 72 percent of total FDI in the month. China has so far continued to finance its multi-billion dollar CPEC project even though domestically it faces an existential crisis as the risk of a reemergence of the coronavirus in the country continues to restrict it from returning to normal and restarting its economy, that has contracted for the first time since at least 1992. The country’s GDP has fallen 6.8 percent as a result of a strict lockdown that reduced economic activity to almost nil. This, compared to a few months back when GDP growth was recorded at 6.0 percent in the fourth quarter of 2019, is quite a drop. Any celebration or overzealous self-praise over the FDI figures for March should be muted as there is a likelihood of countries such as China rethinking their foreign investment strategies going forward.
Pakistan too is grappling with covid-19 and the response has been hardly satisfactory. Initially, when the virus had only spread in Sindh, the federal government was confused and unsure over how to proceed and therefore failed to formulate an effective strategy to restrict or at least mitigate the spread to the rest of the country. Its communication with the populace was, and still is, littered with contradictions. A partial lockdown has now been eased off after two weeks, with some choice industries such as construction and textile being allowed to resume operations if they adhere to certain conditions that are far from enforceable. These half-baked measures to fight the novel virus have not resulted in controlling the spread or the death toll, but have still managed to leave the economy in tatters. The FDI number has gone up considerably, which is welcome, but the future looks bleak and it is bound to fall in the coming months as the economic fallout from the coronavirus amplifies.
