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Dear Sir/Madam,

It is my pleasure to share with you the latest issue of UNCTAD's Global 
Investment Trends Monitor. 

The key message: FDI flows retreated in the first half of 2012, UNCTAD 
revises down its full year forecast.

In the first half of 2012, global foreign direct investment (FDI) inflows 
reached US$668 billion, a decline of 8 per cent compared with the same 
period of 2011, as the economic recovery suffered new setbacks in the 
second quarter of 2012.

The US$61 billion fall was mainly caused by a decline of US$37 billion in 
inflows to the United States and a US$23 billion fall in inflows to BRIC 
countries – Brazil, Russian Federation, India and China. 

The declines were caused by steep falls in both greenfield investment 
projects (-40 per cent) and cross-border M&A transactions (-60 per cent), 
which were visible in the reduced importance of the equity component of 
FDI inflows. The fact that the overall decline remains limited to 8 per 
cent reflects the stable reinvested earnings component of FDI.

Developing countries alone absorbed half of global FDI inflows due to the 
steep fall in flows to the developed countries.

FDI flows showed an uneven pattern among regions. In developing economies, 
while flows to Asia declined, those to Latin America and Africa rose. In 
developed countries, the rise in flows to Europe (in spite of a fall in 
flows to the European Union) and other developed countries was not enough 
to compensate for the decline in flows to North America. 

Despite a decline in FDI inflows, China became the world's largest 
recipient of FDI, in the first half of 2012, followed by the United 
States. However, early indications show that FDI flows to the United 
States might be stronger in the second half of 2012.

Compared to the full-year forecast of FDI inflows published in July, 
UNCTAD now projects that FDI flows will, at best, level-off in 2012 at 
slightly below US$1.6 trillion. The bumpy recovery of the global economy, 
weak global demand and elevated risks related to regulatory changes 
continue to reinforce the wait-and-see attitude of many transnational 
corporations toward investment abroad.
For your information, the next issue of UNCTAD's Investment Policy Monitor 
will be released in mid-November 2012. 

James Zhan 
Director 
Investment & Enterprise Division 
United Nations Conference on Trade & Development 
Palais des Nations, Geneva 
Tel: +41 22 9175797 
www.unctad.org/diae 
Twitter: @unctadwif



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