Dear Colleagues,

We have just released our latest Global Investment Trends Monitor, with the first full-year assessment for foreign direct investment (FDI) in 2020 and prospects for 2021.

Key findings:

• Global FDI in 2020 fell by 42% to an estimated $859 billion, from $1.5 trillion in 2019. It was more than 30% below the trough after the global financial crisis in 2009.
• The decline was concentrated in developed countries, where FDI flows fell by 69% to an estimated $229 billion. Flows to Europe dried up completely to -4 billion (including large negative flows in several countries). A sharp decrease was also recorded in the United States (-49%) to $134 billion.
• FDI to developing economies declined by 12% to an estimated $616 billion. The share of developing economies in global FDI reached 72% – the highest share on record. China topped the ranking of the world largest FDI recipients.
• Looking ahead, the FDI trend is expected to remain weak in 2021. Data on an announcement basis, an indicator of forward trends, provides a mixed picture:
• Sharply lower greenfield project announcements (-35% in 2020) suggest a turnaround in industrial sectors is not yet in sight.
• Upticks in the fourth quarter of 2020 dampened earlier declines in newly announced international project finance deals (-2% for the full year). International investment in infrastructure sectors could thus prove stronger, buoyed by economic support packages in developed countries.
• Similarly, the 2020 decline in cross-border M&As (-10%) was cushioned by higher values in the last part of the year. Looking at M&A announcements, strong deal activity in technology and pharmaceutical industries is expected to push M&A-driven FDI flows higher.
• For developing countries, the trends in greenfield and project finance announcements are a major concern. Although overall FDI flows in developing economies appear relatively resilient, greenfield announcements fell by 46% and international project finance by 7%. These investment types are crucial for productive capacity and infrastructure development and thus for sustainable recovery prospects.

UNCTAD’s Global Investment Trends Monitors are available here. See also our SDG Investment Trends Monitor and our Investment Policy Monitors.

The next regular update on investment data will be published in the World Investment Report 2021, scheduled for publication in June.

Best regards,

James X. Zhan
Director, Investment and Enterprise
United Nations Conference on Trade & Development
Palais des Nations, Geneva
http://www.unctad.org/wir
http://www.worldinvestmentforum.org
http://investmentpolicyhub.unctad.org