China received most foreign direct investments in 2020

Cornelia Mascio
Gennaio 25, 2021

Global foreign direct investment (FDI) slipped in 2020, falling 42 percent from United States dollars 1.5 trillion in 2019 to an estimated USD859 billion, according to an UNCTAD Investment Trends Monitor published on 24 January.

The last time FDI was this low was in the 1990s, and it is now more than 30 percent below the investment trough that followed the 2008-09 global financial crisis.

"Global FDI flows will remain weak in 2021", UNCTAD said in its latest Investment Trends Monitor report, with the world still in the grip of the COVID-19 pandemic, which has eviscerated economies.

China received US$163 billion in inflows past year, compared to US$134 billion attracted by the USA, the United Nations Conference on Trade and Development (UNCTAD) said in a report released on Sunday.

In the Spanish case, the director of companies and investments at UNCDAT said that this was due to the fact that Spanish companies were bought by a large number of foreign competitors.

"Investors are likely to remain cautious in committing capital to new overseas productive assets", Zhan said.

Although FDI flows in developing economies seemed relatively resilient in 2020, greenfield announcements in such countries plunged by 46 per cent, while worldwide project finance - typically financial arrangements from several partners for large infrastructure projects - dropped by seven percent.

"Greenfield project announcements, an indication of future FDI trends, fell 63 per cent to $28bn, from $77bn in 2019".

The United States recorded a 49 pc drop in FDI, falling to an estimated USD134 billion.

It said inflows to Ethiopia declined by 17 per cent but were still substantial at $2.1bn as significant investments took place in the manufacturing, agriculture and hospitality sectors.

Europe fared worse, with flows down by two-thirds to a negative US$4 billion.

In Africa, the fall in foreign direct investment was 18% lower, while Asia was the best-resisting region, down only 4% a year ago, more than half of foreign investment ($ 476 billion). In the United Kingdom, FDI fell to zero. In Spain, FDI rose 52 percent, thanks to several acquisitions.

The global agency said the FDI share of developing economies climaxed at 72per cent.

Sharply lower greenfield project announcements (-35 per cent in 2020) suggest a turnaround in industrial sectors.

The decline in developing economies was relatively measured at (-) 12 per cent to an estimated $616 billion.

For developing countries, the trends in greenfield and project finance announcements are a major concern, the report said.

Risks related to the latest wave of the pandemic, the pace of the roll-out of vaccination programmes and economic support packages, fragile macroeconomic situations in major emerging markets, and uncertainty about the global policy environment for investment will all continue to affect FDI in 2021, the report said.

Acquiring firms are mostly based in developed economies (80 per cent), with European companies "significantly increasing" mergers and acquisitions activity. Infrastructure. Similarly deals in the energy sector propped up M&A values in India, it said.

The indicator is flashing red for developing countries.

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