Global foreign direct investment dips by almost half in first half of 2020
December 6, 2022

Global foreign direct investment dips by almost half in first half of 2020: UNCTAD

GENEVA (SWITZERLAND) – The UN said on Tuesday that global foreign direct investment (FDI) dipped by 49% in Q-1 compared to the same period last year and is on course to record a slump of 40% for the year, fuelled by fears of a deep recession.

For the first time, FDI flows to European economies became negative, dropping to -$7 billion from $202 billion (155 billion pounds). Flows to the US dropped by 61% to $51 billion, said the UN Conference for Trade and Development (UNCTAD) in a report.

Global FDI dropped as MNCs withheld investments to preserve cash reserves, the report said.

“Global FDI flows for the first half of this year went down by close to half… It was more drastic than we expected for the whole year,” James Zhan, director of UNCTAD’s investment and enterprise division, told a news conference.

He said the flows are expected to register a slump of 30 to 40% this year and “moderately” in 2021, by 5 to 10%.

The figures cover cross-border mergers and acquisitions, new greenfield investment projects and project finance deals.

Industrialised nations account for 80% of global transactions and they are the hardest hit and flows fell to $98 billion, the report said.

Flows declined most strongly in Italy, the United States, Brazil and Australia.

China was bucking the trend, Zhan said.

“Their FDI flows remain relatively stable. For the first half of the year the decline was really modest and in fact according to the latest data, for the first 9 months altogether this year FDI into China increased by 2.5%,” he said.

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