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5.8%


PREDICTEDINCREASEINGLOBALGDP FOR2021,ACCORDINGTOTHEOECD ANDTHEWORLDTRADEORGANIZATION


GLOBALOUTLOOKNEWS


AT THE UPPER BOUND OF PROJECTIONS, GLOBAL INVESTMENT CAN MATCH PRE-COVID LEVELS IN 2022


Unctad:FDIto ‘recoverlost ground’in2021


Majority of IPAs expect FDI to increase in 2021


More than a year into the pandemic, investment promo- tion agencies (IPAs) around the world are expressing heightened optimism with regards to foreign direct investment (FDI) prospects in their own countries, and betting on China over the US as the world’s leading source of foreign investment. Despite the challenges of a ‘post-


pandemic’ investment landscape, the survey of executive and senior officers from 100 IPAs in more than 70 countries found that 53% of respondents expect FDI inflows into their territories to increase in 2021, with an additional 15% anticipating the boost to be ‘significant’, accord- ing to Unctad’sWorld Investment Report 2021. Conversely, a mere 18% foresee a


FDI inflows to Asia are predicted to remain resilient


Global foreign direct investment (FDI) is expected to “recover some lost ground” in 2021, and even jump back to pre-Covid levels in 2022 “at the upper bound of projections” although prospects remain “highly uncertain”, according to Unctad’sWorld Investment Report 2021, published on June 21. FDI is projected to increase


by 10% to 15% in 2021 from the historic lows it touched in 2020, according to Unctad forecasts. “This would still leave FDI some 25% belowthe 2019 level. Current fore- casts showa further increase in 2022 which, at the upper bound of projections, bring FDI back to the 2019 level,” Unctad said in a press release. While uncertainties persist and


the recovery will depend on, among other factors, “the pace of economic recovery and the possibility of pandemic relapses”, Unctad’s latest forecasts mirror an improving macroeconomic environment. Back in January, it expected global FDI to remain “weak” throughout 2021, while in the previous World Investment Report, published in mid-2020 right at the onset of the pandemic, it expected FDI to fall by


6


5% to 10% in 2021. James Zhan, Unctad’s director of


investment and enterprise, tells fDi: “We are more optimistic but we haven’t drastically revised our fore- cast,” adding that he is “cautiously optimistic for 2021 and optimistic for 2022.” Mr Zhan stresses that while GDP


is forecast to grow by 5.8% and trade is set to increase by 8% this year, according to figures from the OECD and the World Trade Organization, “the real investment in terms of FDI is lagging”. Typically, the FDI cycle trails the general economic cycle by six months to a year, he says. The FDI recovery will be uneven,


the World Investment Report 2021 stresses. Developed economies are expected to drive global growth in FDI, both because of strong cross- border mergers and acquisitions activity and large-scale public invest- ment support. FDI inflows to Asia will remain


resilient, as the region has stood out as an attractive destination for inter- national investment throughout the pandemic. A substantial recovery of FDI to Africa and to Latin America and the Caribbean is unlikely in the near term, however.■ SETHO’FARRELL


decrease in inward FDI at home, with just 4% forecasting a signifi- cant decrease. This optimism signals a considerable change of heart since April 2020, when 44% of IPAs predicted a decrease in domestic FDI inflows for 2020.■ NAOMIGALLAGHER


Investment plansstillon upwardtrend


Global FDI kept pace in June, as major expansion campaigns were announced by companies serving digitisation and technology adoption across industries. The fDi Index, which tracks


foreign investors’ sentiment, stood at 823 points in June, an increase of 5.7% from a year earlier, but down fromthe high annual percentage rises seen in recent months, accord- ing to the latest figures from fDi Markets. June still recorded the second-highest index score since February 2020, before the World Health Organization (WHO) classi- fied Covid-19 as a pandemic. The number of greenfield FDI


projects announced worldwide by foreign investors were stable at 970 in June.■ ALEXIRWIN-HUNT


www.fDiIntelligence.com August/September 2021


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