Global foreign direct investment halved in first six months of 2020: U.N.

Written by on October 27, 2020

GENEVA (Reuters) – International international direct funding (FDI) plunged by 49% within the first half of 2020 from the identical interval a yr in the past and is on track to fall by as much as 40% for the yr, pushed by fears of a deep recession, the United Nations stated on Tuesday.

FDI flows to European economies turned unfavourable for the primary time ever, falling to -$7 billion from $202 billion, whereas flows to the US fell by 61% to $51 billion, the U.N. Convention for Commerce and Improvement (UNCTAD) stated in a report.

International FDI fell as multinationals postponed investments to protect money, it stated.

“International FDI flows for the primary half of this yr went down by near half… It was extra drastic than we anticipated for the entire yr,” James Zhan, director of UNCTAD’s funding and enterprise division, advised a information convention.

The flows are anticipated to say no by 30 to 40% this yr and “reasonably” in 2021, by 5 to 10%, Zhan stated.

The figures cowl cross-border mergers and acquisitions, new greenfield funding initiatives and challenge finance offers.

Industrialised international locations, which usually account for some 80% of worldwide transactions, had been hardest hit, with flows falling to $98 billion – a stage final seen in 1994, the report stated.

Amongst main FDI recipients in 2019, flows declined most strongly in Italy, the US, Brazil and Australia.

China was bucking the pattern, Zhan stated.

“Their FDI flows stay comparatively secure. For the primary half of the yr the decline was actually modest and in reality in keeping with the newest information, for the primary 9 months altogether this yr FDI into China elevated by 2.5%,” he stated.

Most FDI funding in China was in digital commerce companies, specialised know-how companies, and analysis and growth, Zhan stated.

Reporting by Stephanie Nebehay, Modifying by Rosalba O’Brien

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