Dear Colleagues,

UNCTAD has just released its World investment Report 2021. The following are the Report’s key findings on global FDI trends and prospects:

  • Global FDI flows are expected to bottom out in 2021 and recover some lost ground, with an increase of about 10 to 15 per cent. This would still leave FDI some 25 per cent below the 2019 level. Current forecasts show a further increase in 2022 which, at the upper bound of projections, would bring FDI back to the 2019 level. Prospects are highly uncertain and will depend on, among other factors, the pace of economic recovery and the possibility of pandemic relapses, the potential impact on FDI of recovery spending packages, and policy pressures.
  • The COVID-19 crisis caused a dramatic fall in FDI in 2020. Global FDI flows dropped by 35 per cent to $1 trillion, from $1.5 trillion in 2019. This is almost 20 per cent below the 2009 trough after the global financial crisis.
  • The decline was heavily skewed towards developed economies, where FDI fell by 58 per cent, in part due to oscillations caused by corporate transactions and intrafirm financial flows. FDI in developing economies decreased by a more moderate 8 per cent, mainly because of resilient flows in Asia.
  • FDI trends varied significantly by region. FDI flows to Europe fell by 80 per cent while those to North America by 42 per cent. Africa saw its FDI decline by 16 per cent – a level last seen 15 years ago – while Latin America and the Caribbean by 45 per cent. Flows to developing Asia rose by 4 per cent, increasing Asia’s share of global inflows to 54 per cent. FDI flows to economies in transition fell by 58 per cent to just $24 billion. FDI in structurally weak and vulnerable economies was further weakened by the pandemic.
  • FDI patterns contrasted sharply with those in new project activity, where developing countries are bearing the brunt of the investment downturn. In developing countries, the number of newly announced greenfield projects fell by 42 per cent and the number of international project finance deals – important for infrastructure – by 14 per cent.
  • COVID-19 has caused a collapse in investment flows to sectors relevant for the SDGs in developing countries. All but one SDG investment sector registered a double-digit decline from pre-pandemic levels. The shock exacerbated declines in sectors that were already weak before the COVID-19 crisis – such as power, food and agriculture, and health.

Best regards,
James X. Zhan
Director, Investment and Enterprise
Lead, World Investment Report
United Nations Conference on Trade & Development
Palais des Nations, Geneva

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