Global FDI flows showed a strong rebound in 2021, but the recovery is highly uneven
According to UNCTAD Global Trends Investment Monitor, the outlook for global FDI in 2022 is positive, although the 2021 rebound growth rate is unlikely to be repeated. Global FDI flows showed a strong rebound in 2021, up 77% to an estimated $1.65 trillion, from $929 billion in 2020, surpassing their pre-Covid-19 level.
New UNCTAD estimates show that infrastructure finance is up due to recovery stimulus packages, but greenfield investment activity remains weak across industrial sectors.
The following are some of the key findings in the latest UNCTAD Monitor:
- In developed economies, FDI reached an estimated $777 billion in 2021 – three times the exceptionally low level in 2020. Of the total increase in global FDI flows in 2021 almost three quarters was recorded in developed regions.
- FDI flows in developing economies increased by 30% to nearly $870 billion, with a growth acceleration in East and South-East Asia, a recovery to near pre-pandemic levels in Latin America and the Caribbean, an uptick in West Asia and moderate rises in most countries in Africa.
- Investor confidence is strong in infrastructure sectors, supported by favourable long-term financing conditions, recovery stimulus packages, and overseas investment programmes. The number of international project finance deals was up 53%, with sizeable increases in most high-income regions and in Asia and Latin America and the Caribbean.
- Investor confidence in industry and global value chains remains weak. Greenfield investment project announcements were practically flat (-1% in number, +7% in value). The number of new projects in GVC-intensive industries fell further.
- The recovery of investment flows to SDG-relevant sectors in developing economies remains fragile. The combined value of announced greenfield investments and project finance deals rose by 55%, but mostly because of a small number of large deals in the renewables sector. The number of SDG-relevant investment projects in developing economies rose by only 11%.
- In LDCs, the trend in SDG-relevant investment is less favourable. SDG investment project numbers in LDCs declined by a further 17%, after the 30% fall in 2020.