OECD POLICY NOTE FOREIGN DIRECT INVESTMENT FLOWS IN THE TIME OF COVID-19
The OECD’s latest policy note Foreign Direct Investment Flows in the time of COVID-19 considers the implications and challenges for international investment and offers initial responses from the OECD investment policy community as economies around the world address the crisis and prepare for the recovery.
FDI flows are expected to fall by more than 30% in 2020 even under the most optimistic scenario
According to OECD, FDI flows are expected to fall by more than 30% in 2020 even under the most optimistic scenario for the success of the public health and economic support policy measures taken by governments to address the COVID-19 pandemic and the resulting recession. A sharp drop in FDI flows is expected in the first half of 2020. After that, the impact on FDI flows will depend on the success of the public health and economic policy measures taken by governments. Under the pessimistic scenario, the drop in FDI flows lasts longer.
FDI flows to developing countries are expected to drop even more because sectors that have been severely impacted by the pandemic
OECD expects FDI flows to developing countries to drop even more because sectors that have been severely impacted by the pandemic, including the primary and manufacturing sectors, account for a larger share of their FDI than in developed economies.
OECD stresses that FDI could play an important role in supporting economies during and after the crisis through financial support to their affiliates, assisting governments in addressing the pandemic, and through linkages with local firms.
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Source: OECD
