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GENEVA:
Global foreign direct investment (FDI) plunged by 49% in the first half of 2020 from the same period a year ago and is on course to fall by up to 40% for the year, driven by fears of a deep recession, the United Nations said on Tuesday.
FDI flows to European economies turned negative for the first time ever, falling to -$7 billion from $202 billion, while flows to the United States fell by 61% to $51 billion, the U.N. Conference for Trade and Development (UNCTAD) said in a report.
“Global FDI flows for the first half of this year went down by close to half… It was more drastic than we expected for the whole year,” James Zhan, director of UNCTAD’s investment and enterprise division, told a news conference.
The flows are expected to decline by 30 to 40% this year and “moderately” in 2021, by 5 to 10%, Zhan said.
The figures cover cross-border mergers and acquisitions, new greenfield investment projects and project finance deals.
Industrialized countries, which normally account for some 80% of global transactions, were hardest hit, with flows falling to $98 billion – a level last seen in 1994, the report said.
Among major FDI recipients in 2019, flows declined most strongly in Italy, the United States, Brazil and Australia.
China was bucking the trend, Zhan said.
“Their FDI flows remain relatively stable. For the first half of the year the decline was really modest and in fact according to the latest data, for the first 9 months altogether this year FDI into China increased by 2.5%,” he said.
Most FDI investment in China was in electronic commerce services, specialized technology services, and research and development, Zhan said.
FDI inflows into India in the first five months of 2020-21 hits a record high
Foreign direct investment (FDI) inflows into India in the first five months of 2020-21 have hit a record high, despite a sharp 60% contraction in the first quarter, with July and August raking in over $20 billion of equity FDI.
Total FDI inflows surged from $11.51 billion between April and June to $35.73 billion by the end of August. Equity FDI more than quadrupled from $6.5 billion between April and June, to $27.1 billion by August — 16% higher than the first five months of 2019-20. To put that in context, India received about $50 billion in equity FDI in 2019-20.
Both, total FDI and equity FDI viewed in isolation, were the highest ever for the five month period, the Commerce and Industry Ministry said on Tuesday. The increased FDI is a result of FDI policy reforms, investment facilitation and ease of doing business, the Ministry said. Total FDI flows include fresh equity investments as well as re-invested earnings of foreign investors and other forms of investment capital such as debt.
FDI equity flows were boosted by investments into Jio Platforms, Reliance Industries’ telecom subsidiary, from global investors like Google, that bet $4.5 billion on the venture in July.