I
wish
to share with you
the latest UNCTAD assessment
on the potential impact of the Coronavirus
pandemic
on
foreign direct investment (FDI)
and global value-chains (GVCs), in our special
issue of
the Global Investment Trends Monitor.
The impact scenarios for the pandemic are evolving day-by-day
in response to the rapid spread of the virus. We now project the
downward pressure on global
FDI
to be in the range of
-30% to -40%
leading up to
2021.
The
top 5,000
multinationals,
which account for a significant share of global FDI, now forecast
downward revisions of
their
2020 earnings estimates of
-30%
on average,
with peaks of -200% in the most affected industries,
and
this
trend is likely to deteriorate further.
The pandemic
coupled with the
necessary
mitigation measures and lockdowns
is
affecting all components of FDI. Capital
expenditures, greenfield investments and expansions are all on hold due to the
physical closure of sites and production slowdowns.
New
M&A announcements are on course to drop by -70%
globally in Q1.
Initially, a time-limited
global supply chain shock
from Covid-19
appeared to be the main
factor affecting
FDI prospects.
This has
now
been overtaken by
the expectation of a global
recession,
which could extend the
shock on
GVCs
and prolong the vulnerabilities of local suppliers and small businesses worldwide.
An in-depth analysis of FDI trends will feature in the forthcoming World Investment Report 2020,
published in June.
Best regards,
James X. Zhan
Director,
Investment
and Enterprise
Lead, World Investment Report
United Nations Conference on Trade & Development
Palais des Nations, Geneva
http://www.unctad.org/wir
worldinvestmentforum.unctad.org
http://investmentpolicyhub.unctad.org