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Business Recorder
2 days ago
- Business
- Business Recorder
FDI in Pakistan: Optimism amid constraints
Foreign Direct Investment (FDI) has long been a weak link in Pakistan's economic progress. While there has been no substantial improvement in inflows—annual FDI has remained below $2 billion on average—the State Bank of Pakistan's latest State of the Economy report presents a cautiously optimistic view of FDI trends and prospects. According to the central bank, the current FDI landscape and outlook reflect several key dynamics. The report notes significant investment inflows primarily in sectors such as power (hydel and coal), financial services (including microfinance and investment banks), and oil and gas exploration. However, it also acknowledges that these inflows remain heavily concentrated in traditional sectors, with China continuing to play a significant role—particularly in power generation infrastructure and consumer electronics. While the report highlights that major FDI sources include the Middle East, the UK, the US, and Hong Kong—targeting long-term growth sectors like renewable energy and consumer electronics manufacturing—monthly SBP data does not reflect noticeable spikes in overall inflows. Similarly, while the ICT sector is portrayed as a bright spot due to consistent growth and supportive policy measures, FDI into the sector remains small in real terms. Despite these positive developments, challenges persist. The central bank's half-yearly report underlines the need to diversify FDI beyond conventional sectors. It also points to increasing profit repatriation, which places pressure on the financial account, and highlights that official loan disbursements continue to fall short of commitments—further constraining financial inflows. The central bank links sustainable FDI inflows to long-term improvements in competitiveness, particularly those rooted in productivity, policy stability, and institutional quality – something that has been missing in Pakistan. The document advocates a strategic shift from short-term cost advantages to deeper reforms that create an enabling environment for high-quality, diversified, and durable foreign investment. Looking ahead, the SBP maintains a cautiously optimistic stance on FDI. The ICT sector, buoyed by ongoing support from the government and central bank, is expected to maintain its growth trajectory, contributing to export expansion and attracting global investment. Infrastructure development, especially in renewable energy and power transmission, is likely to continue drawing interest from strategic partners such as China. Moreover, improved macroeconomic stability, declining global interest rates, and more favourable global financial conditions could support greater FDI inflows in the short to medium term. That said, risks tied to global economic trends, domestic political stability, policy continuity, and external debt repayment obligations remain significant. In a recent engagement with international investors, the Governor of the State Bank presented a more upbeat picture of Pakistan's macroeconomic outlook. Investors were told that the outlook for FDI is positive, driven by prudent monetary policy, consistent fiscal consolidation, and improving inflation dynamics. The Governor emphasized the strengthening of foreign exchange reserves without reliance on additional external debt—highlighting this as a key marker of sustainable fiscal management. He also pointed to the gradual recovery in GDP growth and recent upgrades by international credit rating agencies as signs of renewed investor confidence. With a continued focus on structural reforms aimed at fostering long-term economic stability, the Governor portrayed a scenario in which ongoing economic improvements, stronger external accounts, reduced debt burdens, and international recognition enhance Pakistan's prospects for attracting and sustaining FDI in the near to medium term. However, a closer comparison of the SBP report and the Governor's remarks reveals notable some differences in tone and emphasis. While the Governor's statement highlights the build-up of external buffers independent of external debt—casting debt sustainability in a favourable light—the SBP report takes a more measured view. It directly addresses the financial pressures arising from reduced official inflows and significant external debt repayment obligations. Although these perspectives are not inherently contradictory, they differ in tone and depth. The SBP report presents a balanced assessment, acknowledging both strengths and vulnerabilities, while the Governor's remarks are more optimistic, focusing on macroeconomic gains and reform momentum.
Arab News
6 days ago
- Business
- Arab News
Pakistan projects 3-4% inflation next month ahead of June 10 budget
KARACHI: Pakistan expects inflation to pick up to between 3 percent and 4 percent in June, the Finance Ministry said in its monthly economic report released Thursday, as the country prepares to announce its federal budget for the fiscal year 2025-26 on June 10, a date that falls during the Eid Al-Adha holidays. The ministry said consumer price inflation was projected to ease between 1.5 percent and 2 percent year-on-year in May, following months of steady decline driven by monetary tightening and a drop in food and energy prices. However, it noted that inflationary pressures could resurface slightly next month due to seasonal factors and base effects. 'Improved weather conditions, better crop yields and a stable exchange rate have helped reduce inflation to a historical low,' the report said, adding that 'inflation is projected to remain between 1.5-2.0 percent in May, with a possible rise to 3.0-4.0 percent by June 2025.' The State Bank of Pakistan, in its half-yearly report last month, forecast average inflation for the fiscal year ending June 2025 to remain within 5.5 percent to 7.5 percent, reflecting easing cost pressures across key commodities. Finance Adviser Khurram Schehzad on Thursday confirmed the official timeline for the country's fiscal announcements in a social media post aimed at dispelling speculation about possible delays due to the Eid Al-Adha holidays. 'The dates are firm,' he said on platform X. 'As communicated earlier, the upcoming Federal Budget FY26 is on schedule to be announced on June 10, 2025. Similarly, the upcoming Pakistan Economic Survey FY25 is scheduled to be announced on June 9, 2025.' Pakistan's macroeconomic outlook has improved in recent months, supported by a stronger current account balance, improved remittances and falling inflation. However, authorities remain cautious as they seek to build on recent economic stabilization, steer the country toward gradual growth and reaffirm their commitment to ongoing economic reforms. With input from Reuters
Arab News
6 days ago
- Business
- Arab News
Pakistan projects 3-4 percent inflation next month ahead of June 10 budget
KARACHI: Pakistan expects inflation to pick up to between 3 percent and 4 percent in June, the Finance Ministry said in its monthly economic report released Thursday, as the country prepares to announce its federal budget for the fiscal year 2025-26 on June 10, a date that falls during the Eid Al-Adha holidays. The ministry said consumer price inflation was projected to ease between 1.5 percent and 2 percent year-on-year in May, following months of steady decline driven by monetary tightening and a drop in food and energy prices. However, it noted that inflationary pressures could resurface slightly next month due to seasonal factors and base effects. 'Improved weather conditions, better crop yields and a stable exchange rate have helped reduce inflation to a historical low,' the report said, adding that 'inflation is projected to remain between 1.5-2.0 percent in May, with a possible rise to 3.0-4.0 percent by June 2025.' The State Bank of Pakistan, in its half-yearly report last month, forecast average inflation for the fiscal year ending June 2025 to remain within 5.5 percent to 7.5 percent, reflecting easing cost pressures across key commodities. Finance Adviser Khurram Schehzad on Thursday confirmed the official timeline for the country's fiscal announcements in a social media post aimed at dispelling speculation about possible delays due to the Eid Al-Adha holidays. 'The dates are firm,' he said on platform X. 'As communicated earlier, the upcoming Federal Budget FY26 is on schedule to be announced on June 10, 2025. Similarly, the upcoming Pakistan Economic Survey FY25 is scheduled to be announced on June 9, 2025.' Pakistan's macroeconomic outlook has improved in recent months, supported by a stronger current account balance, improved remittances and falling inflation. However, authorities remain cautious as they seek to build on recent economic stabilization, steer the country toward gradual growth and reaffirm their commitment to ongoing economic reforms. With input from Reuters
Express Tribune
23-05-2025
- Business
- Express Tribune
SBP to remain closed on May 28
Listen to article The State Bank of Pakistan has announced a holiday on May 28, 2025, to observe Youm-e-Takbeer, marking the day when Pakistan became a nuclear power in 1998. According to the notification from the State Bank, following the Government of Pakistan's decision, all offices and branches will remain closed on Wednesday, May 28, in observance of the national holiday. Meanwhile, the Pakistan Stock Exchange (PSX) has also announced that it will remain closed in observance of the holiday. May 28 is officially recognised as a gazetted holiday nationwide to celebrate the 1998 achievement that saw Pakistan emerged as the first Muslim-majority country to acquire nuclear capabilities, marking a pivotal moment in its history. Read More: Youm-e-Takbeer: Nation's 'unwavering determination' lauded This achievement was a response to the regional security dynamics and ensured that Pakistan's defence capabilities were robust as well as credible.
Hans India
23-05-2025
- Business
- Hans India
Bengaluru Tech Firm to Shift Operations to Pune Over Kannada Language Issues
It is natural to have a fondness for a regional language, but it can lead to issues when taken too far. For a long time, there have been strong discussions in Karnataka about promoting the Kannada language and prioritizing jobs for Kannadigas. However, Bengaluru, known as the hub of India's IT industry and startup economy, is reportedly losing its reputation due to rising incidents of linguistic discrimination. Recently, Kaushik Mukherjee, the founder of a Bengaluru-based tech company, addressed the issue. He revealed that his company's office in Bengaluru will be closed in six months and operations will be shifted to Pune. The move comes after several employees reported challenges stemming from language-related discrimination. Mukherjee stated that the company felt compelled to respond to the growing conflict over the Kannada language, which was creating difficulties for its team. The decision to shift locations was made based on employee feedback. In a recent incident that sparked controversy, a State Bank manager was transferred after a customer complained that she did not speak Kannada. Mukherjee expressed concern that his employees could face similar targeting in the future. He said the request to relocate was initiated by the employees themselves, and after understanding their concerns, the company concluded that moving out of Bengaluru was the right step. Netizens reacted to this development with mixed views. One person suggested relocating to Hyderabad, noting that language is not a major issue there. Another pointed out that Pune is in Maharashtra, where Marathi is the dominant language, and expressed support for the Kannadigas. Others offered advice to shift operations to cities where Hindi is more commonly spoken. One commenter recommended moving to Gurugram or Haryana, stating that such problems would not arise there.
