 |
 |
Dear Colleagues, It is my pleasure to share with you the key findings on global investment trends and prospects from this year's UNCTAD World Investment Report 2016. Recovery in FDI was strong in 2015. Global foreign direct investment (FDI) flows jumped by 38 per cent to $1.76 trillion, their highest level since the global economic and financial crisis of 2008–2009. A surge in cross-border mergers and acquisitions (M&As) to $721 billion, from $432 billion in 2014, was the principal factor behind the global rebound. The value of announced greenfield investment remained at a high level of $766 billion. Part of the growth in FDI was due to corporate reconfigurations. These transactions often involve large movements in the balance of payments but little change in actual operations. Discounting these large-scale corporate reconfigurations implies a more moderate increase of around 15 per cent in global FDI flows. Inward FDI flows to developed economies almost doubled to $962 billion. As a result, developed economies tipped the balance back in their favour with 55 per cent of global FDI, up from 41 per cent in 2014. Developing economies saw their FDI inflows reach a new high of $765 billion, 9 per cent higher than in 2014. Primary sector FDI activity decreased, manufacturing increased. A flurry of deals raised the share of manufacturing in cross-border M&As above 50 per cent in 2015. FDI in the primary sector declined because of reductions in planned capital expenditures in response to declining commodity prices, as well as a sharp fall in reinvested earnings as profit margins shrank. Looking ahead, FDI flows are expected to decline by 10-15 per cent in 2016, reflecting the fragility of the global economy, persistent weakness of aggregate demand, sluggish growth in some commodity exporting countries and a slump in MNE profits . Cross-border M&A activity in early 2016 confirms the projected decline of FDI flows. The value of transactions announced during the first four months (including divestments) was 32 per cent lower than during the same period in 2015. Over the medium term, global FDI flows are projected to resume growth in 2017 and to surpass $1.8 trillion in 2018, reflecting an expected pick up in global growth. This year’s UNCTAD business survey of MNE executives echoes this forecast. Please note that the UNCTAD World Investment Forum 2016 will take place in Nairobi, Kenya, 17-21 July 2016. With best regards, James X. Zhan Director, Investment & Enterprise Team Leader, World Investment Report United Nations Conference on Trade & Development Palais des Nations, Geneva Tel: +41 22 9175797 www.unctad.org/diae http://www.worldinvestmentreport.org/