UNCTAD’s latest assessment of the impact of the COVID-19 pandemic on global investment: Global foreign direct investment (FDI) flows in the first half of 2020 were down 49% compared to 2019 as lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multination enterprises to re-assess new projects.
- In the first half of 2020 global foreign direct investment (FDI) flows fell by 49%.
- The decline cut across all major forms of FDI: new greenfield investment announcements fell by 37%, cross-border mergers and acquisitions (M&As) by 15% and newly announced cross-border project finance deals, an important source of investment in infrastructure, by 25%.
- Developed economies saw the biggest fall, with a decline of 75% compared to 2019. Inflows into Europe were negative, flows to North America fell by 56%.
- FDI flows to developing economies decreased by 16% ‒ less than expected. Flows were 28% lower in Africa, 25% in Latin America and the Caribbean and 12% in Asia. FDI flows to transition economies were down 81%.
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Global FDI is projected to contract by 30-40% for the full year 2020.
- The rate of decline in developed economies is likely to flatten as some investment activity appears to be picking up in Q3. Flows to developing economies are expected to stabilize with East Asia showing early signs of recovery. Significant uncertainty remains, with the outlook depending on the duration of the health crisis and on the effectiveness of policies to mitigate the economic impact.
- Despite the 2020 fall, FDI remains the most important source of external finance for developing countries. Other sources, including remittances and official development assistance – particularly important for LDCs – are also falling. The overall decline could aggravate external payments problems in developing countries and LDCs.
Source/Image Credit: UNCTAD