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$2.6BN THEAUTOMOTIVESECTOR


SAWMORETHAN$2.6BNIN PROJECTSINAPRIL


GLOBALOUTLOOKNEWS


fDi INDEX MAINTAINSMOMENTUMAS EARLY INVESTMENT SIGNALS HIT RECORD HIGH


Globalforeign investmentis recoveringwell


Driving the economy: the automotive sector saw the largest increase in cross-border investment activity in April


Global foreign direct investment (FDI) continued its recovery in April, withsignals of future investment reaching their highest on record, as capital pledges relating to sustainability and technology post large gains. The fDi Index, which tracks


foreign investors’ sentiment, stood at 732 points in April—downfrom March, but marking an increase of 66.7% from April 2020, when countries were placed under Covid-19 lockdowns worldwide, according to the latest figures from investment tracker fDi Markets. This represents the largest annual increase in the fDi Index since it began in October 2015. The number of greenfield FDI


projects announced by foreign investors fell slightly to 853 in April, downfrom 1064 a month earlier, but almost double the record lowof 483 projects tracked in April 2020. This points to a new forming


capital expenditure (capex) cycle, as outlined by Morgan Stanley analysts onMay 17, who predict that capex “will generally grow above gross domestic product through our forecast horizon [into the second quarter of 2022].” While projectnumbers declined,


there are strong signs of more investment to come. Some449 signals


6


—an early indication that a company will be considering a future investment project and amajor component of the fDi Index—were tracked in April. This is the highest number on record. More than half of April’s signals,


which include both new funding and plans for expansion, were in the tech sector, including UK-based cybersecurity giant Darktrace, which raised £165mafter listing on the London Stock Exchange. Meanwhile, California-based Intel


set out plans to expand chip manufacturing capacity in the US, Europe and other global locations, while Ohio-based retail giant Kroger is considering US sites for customer fulfilment centres as it pushes forward its e-commerce strategy. The automotive sector as a whole


sawthe largest increase in cross- border investment activity in April, with projects worth more than $2.6bn, up by almost $1.5bn from a year earlier. Michigan-based General Motors is planning to invest $1bn to expand its operations in Ramos Arizpe, Mexico, while Japanese carmaker Toyota is to invest $803m into its Princeton, Indiana plant, adding two electric SUVs to production and creating 1400 jobs.■ ALEXIRWIN-HUNT


‘Investment will outpace growth’


Capital investment by US-based companies, traditionally the biggest source of global investment, is set to rebound faster than gross domestic product (GDP) growth as the world economy turns the page on the Covid-19 pandemic, according to research from investment bank Morgan Stanley. “Businesses will look to boost


productivity and output to meet a robust demand environment, and counter cost pressures on margins,” Morgan Stanley’s analysts wrote in a research note on May 17. “This means [capital expenditure]


will generally grow aboveGDP through our forecast horizon [into the second quarter of 2022], but with some forms of investment driving this more than others.” The strong recovery of the US


economy has prompted analysts to adjust their growth forecasts. Morgan Stanley nowexpects annual GDP growth to stand at 7.5% in 2021—its highest level since 1951. The analysts expect investment


to be particularly strong on equipment and intellectual property, while ‘non-residential investment’ will “modestly” outgrow GDP.■ JACOPODETTONI


Global trade beat pre-Covid-19 levels in spring


The first three months of 2021 have seen global trade stage a dramatic comeback, surpassing 2019 levels, according to the UN’s Conference on Trade and Development’s (Unctad’s) May Global Trade Update. “Global trade has recorded a


faster recovery from the recession caused by the pandemic than in the past two trade recessions,” said Unctad economist Alessandro Nicita in a statement. This is the latest evidence that


the global economy and cross- border flows may be turning a corner more quickly than initial forecasts suggested. ■ DANIELLEMYLES


www.fDiIntelligence.com June/July 2021


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