Global Foreign Direct Investment to Plunge 40% to 15-Year Low, UNCTAD Forecasts
Liao Shumin
DATE:  Jun 17 2020
/ SOURCE:  Yicai
Global Foreign Direct Investment to Plunge 40% to 15-Year Low, UNCTAD Forecasts Global Foreign Direct Investment to Plunge 40% to 15-Year Low, UNCTAD Forecasts

(Yicai Global) June 17 -- Global foreign direct investment flows will drop to a 15-year nadir of as much as 40 percent this year from its last year’s value of USD1.54 trillion, according to the United Nations Conference on Trade and Development’s World Investment Report 2020.

This is the first time this figure has fallen below USD1 trillion since 2005. FDI is also expected to shrink by a further 5 percent to 10 percent next year and not stage a recovery until 2022, per the report.

Multinational enterprises’ profit alerts sound an early warning. The top 5,000 MNEs worldwide, which contribute the most FDI, have seen expected earnings for the year ratcheted down by 40 percent on average, with some sectors sinking into the red. Profits will wallop reinvested earnings, which generally yield more than 50 percent of FDI.

“The outlook is highly uncertain. Prospects depend on the duration of the health crisis and on the effectiveness of policies mitigating the pandemic’s economic effects,” said the United Nations Conference on Trade and Development’s Secretary-General Mukhisa Kituyi.

FDI streams to developing countries in Asia may contract as much as 45 percent this year, per the report. FDI to China shrank 13 per cent in the first quarter from the same time last year.

Formed in 1964 as a permanent intergovernmental body, UNCTAD is the arm of the United Nations Secretariat grappling with trade, investment and development questions. 

Editor: Ben Armour

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Keywords:   UNCTAD,Foreign Direct Investmen