Global foreign direct investment (FDI) flows are expected to drop 40% this year, the UN announced on Tuesday, citing the pandemic as the principle factor.
FDI will shrink from its 2019 value of $1.54 trillion (€1.36 trillion) to less than $1 trillion for the first time since 2005, the United Nations Conference on Trade and Development (UNCTAD) said.
Furthermore, FDI, an indicator of cross-border private sector investments, is expected to fall by an additional 5-10% next year and only start to bounce back in 2022, UNCTAD said in its annual World Investment Report.
Developing economies at greatest risk
“The global economy is in a direr situation than it was during the 2008 financial crisis,” UNCTAD Secretary-General Mukhisa Kituyi told reporters. “The pandemic represents a supply, demand, and policy shock for FDI. ”
Less developed countries are likely to be hardest hit .
“Developing economies are expected to see the biggest fall in FDI,” as they tend to depend on foreign investment for production and raw material extraction, said James Zhan, UNCTAD’s director of investment and enterprise.
Watch video 07:30
Street Debate: Neocolonialism
Meanwhile, in Asia, COVID-19 is expected to cause a drop in reinvested earnings of foreign affiliates, while the crisis has highlighted the significance of China and other Asian economies as global manufacturing hubs.
All 32 landlocked, less-developed nations in the region were struggling, particularly regarding border closures, the report said.
Indeed, those countries do not have the luxury of turning to direct sea transport, the mode that represents roughly 80% of global trade, said UNCTAD.
“As we saw in the past, international investment played a lead role in recovery from global financial crises,” Zhan said.
- Vietnam's pledged foreign direct investment falls 26 percent
- Q1 foreign direct investment inflow hits four-year high
- Foreign direct investment in Vietnam expected to surge
- Reducing risks of outward foreign direct investment
- Bac Giang works to lure foreign direct investment
- Q1 foreign direct investment surges to $7.71b DTiNews
- Gov't monthly meeting emphasized foreign direct investment attraction
- Foreign direct investment in Vietnam may reach $28 billion by end of 2017
- 38 projects called for foreign direct investment
- South Korea leads foreign direct investments in Vietnam
- Foreign direct investment reached 4.4 billion USD in first nine months
- $9.6 billion of foreign direct investment drawn in the first 9 months
Coronavirus: Foreign direct investments to fall 40% in 2020, UN report have 398 words, post on www.dw.com at January 16, 2020. This is cached page on VietNam Breaking News. If you want remove this page, please contact us.