Global foreign direct investment fell 49% in the first half of the year, Europe and the United States fell the most
The latest “International Investment Trend Monitoring” data from the United Nations Conference on Trade and Development shows that due to the new crown epidemic crisis, global foreign direct investment has shrunk by nearly 50% in the first half of this year compared to last year.
At the moment of the epidemic, global lockdown measures It has slowed down the progress of existing investment projects, and concerns about the deep economic decline have caused multinational companies to re-examine their new projects. As a result, UNCTAD still maintains its June forecast of a 30% to 40% drop in global foreign direct investment.
The report shows that developed countries have seen a sharp decline in the total global foreign direct investment of all major types, falling to 98 billion U.S. dollars in six months, down 75% compared to last year. Among them, foreign direct investment in the Netherlands and Switzerland fell the most, and total foreign direct investment in the United States fell 56% to 68 billion US dollars.
In comparison, the inflow of foreign direct investment from developing countries has decreased by 16%, which is better than previously expected. The main reason is the flexibility shown by the Chinese investment market. In the entire Asian sector, foreign direct investment decreased by only 12%. In the first half of 2020, Asian developing countries accounted for more than half of global foreign direct investment.
“The rate of decline in total foreign direct investment is greater than we expected, especially in developed countries. Developing countries responded to the storm better in the first half of this year than developed countries. The prospects are still great. Uncertainty.” said James James, Director of Investment and Company of UNCTAD, analyzed.
In addition, the monitoring data shows that the total value of cross-border acquisitions and mergers and acquisitions reached 319 billion US dollars in the first three quarters of this year. Cross-border M&A in developed countries fell 21%, still accounting for 80% of the total global transactions, mainly reflected in the continued progress of M&A in the digital industry. The number of announced cross-border projects and financial transactions fell by 25%, with the largest decline seen in the third quarter of this year.
Even so, UNCTAD still believes that the outlook for the whole year is still negative. On June 16, UNCTAD released the “2020 World Investment Report”. The report showed that this year’s global foreign direct investment flow will fall by 40% from 1.54 trillion US dollars. This will be the first time since 2005 that it has fallen below one trillion US dollars.
The agency expects that the total foreign direct investment for the whole year will shrink by 30 to 40%, but the downward trend of foreign direct investment in developed countries has entered a plateau period, and some investment activities have begun to rise in the third quarter trend. At the same time, the flow of funds in developing countries has begun to stabilize. Even if there will be a big decline in 2020, foreign direct investment is still an important source of external financial support for developing countries. Last year, the global foreign direct investment stock was as high as 37 trillion US dollars.
The agency’s analysis believes that the performance of foreign direct investment will depend on the duration of the health crisis and the effectiveness of many policies to curb the impact of the epidemic on the economy. The risks posed by geopolitics are still increasing uncertainty.
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