Global foreign direct investment (FDI) slipped in 2020, falling 42 percent from USD 1.5 trillion in 2019 to an estimated USD859 billion, according to an UNCTAD Investment Trends Monitor published on 24 January. Such a low level was last seen in the 1990s and is more than 30 pc below the investment trough that followed the 2008-2009 global financial crisis.

Despite projections for the global economy to recover in 2021, although hesitant and uneven , UNCTAD expects FDI flows to remain weak due to uncertainty over the evolution of the COVID-19 pandemic. The organization had projected a 5-10 pc FDI slide in 2021 in last year’s World Investment Report. 

“The effects of the pandemic on investment will linger,” said James Zhan, director of UNCTAD’s investment division. “Investors are likely to remain cautious in committing capital to new overseas productive assets.” According to the report, the decline in FDI was concentrated in developed countries, where flows plummeted by 69 pc to an estimated USD229 billion.

Flows to North America declined by 46 pc to USD166 billion, with cross-border mergers and acquisitions (M&As) dropping by 43 pc. Announced greenfield investment projects also fell by 29 pc and project finance deals tumbled by 2 pc.

The United States recorded a 49 pc drop in FDI, falling to an estimated USD134 billion. The decline took place in wholesale trade, financial services and manufacturing. Cross-border M&A sales of US assets to foreign investors fell by 41 pc, mostly in the primary sector.

On the other side of the Atlantic Ocean, investment to Europe dried up. Flows fell by two-thirds to -USD4 billion. In the United Kingdom, FDI fell to zero, and declines were recorded in other major recipients.

UK biz activity suffers steep fall in January: Report

Budget 2021-22 Optimism: Pandemic underlined need for higher budget allocation for healthcare sector

Joe Biden announces USD 1.9 trillion COVID-19 stimulus plan to revive US economy