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$486.9BN


WORTHOFFOREIGN INVESTMENTPROJECTS WEREANNOUNCEDIN2020


GLOBALOUTLOOKNEWS


FOREIGN DIRECT INVESTMENT PLUMMETS TO HISTORIC LOWS AS THE PANDEMIC BITES


Covid-19blows $311bnof FDIin2020


The virus has had a devastating effect on global investment


Global foreign investment plummeted to historic lows in 2020 as Covid-19 forced investors to push the brakes on expansion plans. Foreign investment projects


worth an estimated $486.9bn were announced by global companies in 2020, which is $310.8bn (40%) less than in 2019, according to full-year data from investment monitor fDi Markets. This means that the pandemic has sunk global direct investment to its lowest level since 2003, when the fDi Markets series began. Even in the aftermath of the global financial crisis, it had not fallen belowthe $589.4bn mark, according to fDi Markets. While the dip has spread quite


evenly across the board, for the most part, a fewsectors have felt the Covid chill more than others. The pandemic has obliterated


investment in the tourism sector, following the draconian travel restrictions placed on as billions of people throughout 2020. A full recovery is not expected any time soon. Announced foreign investment in the tourism sector fell from $48.5bn in 2019 to $12.6bn in 2020, fDi Markets figures show. Other notable victims were real estate and the oil and gas sector. The


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pandemic seems to have dramatically accelerated the paradigmshift in the energy industry, with oil prices even charting in negative territory for a fewweeks and international oil companies writing off assets for billions of dollars. Announced investment projects in coal and oil and gas plummeted to $42.1bn in 2020, from$112.3bn a year earlier, fDi Markets data show. Real estate, particularly commercial real estate, was also heavily affected by the paradigmshift prompted by Covid-19. Foreign investment in the sector fell to $34.3bn in the year, halving from a year earlier, according to fDi Markets. The outlook on global investment


remains gloomy. The fDi Index, a proxy of investment sentiment, stood at 583 points in December, downby 23.98% from a year earlier and pretty much stable fromthe previous five months. Unctad expects overall foreign direct investment (FDI) to remain ‘weak’ in 2021, and is not expecting a recovery before 2022. The global FDI community seemsto agree, although there is also some consensus over the potential for selected sectors, such as renewables, semiconductors and others, to buck the trend once again.■ JACOPODETTONI


WEF forsees uneven recovery


In the wake of a pandemic that has already had profound effects on the global economy, work, social cohesion and national politics, risks of all kinds are set to increase. Yet, the dominating risk factor that looms large is that of climate change. Ahead of its annual Davos


conference, theWorld Economic Forumhas published its Global Risks Report 2021 in a bid to make leaders and policymakers pay attention to the risks the world is facing and their relative importance. The report, which includes the results from the Global Risks Perception Survey, looks at the risk landscape of our post-pandemic world, where environmental damage, widening inequality and possible further erosion of multilateralism prevail. “In 2020, the risk of a global


pandemic became reality — something this report has been highlighting since 2006”, said Saadia Zahidi, managing director at the World Economic Forum, adding that “the lesson here is for all of us to recognise that ignoring [risks] doesn’t make them less likely to happen”.■ SETHO’FARRELL


StrongM&A boosts China FDI


China was the world’s largest recipient of foreign direct investment (FDI) in 2020, as a surge in cross-border merger and acquisitions (M&A) counteracted a sharp decline in greenfield investment, according to a report published by the UN’s Conference on Trade and Development (Unctad) on January 24 2021. While the Asian giant’s


inbound FDI flows rose by 4%, compared with 2019, to reach $163bn, this was only possible due to a 54% rush in cross-border M&A, mostly in the ICT and pharmaceutical industries. A notable deal was the acquisition of Chinese biotech giant Beigene by US-based Amgen for $4.9bn. ALEXIRWIN-HUNT


www.fDiIntelligence.com February/March 2021


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