Foreign Investment Faces U-shaped Recovery: UN

Geneva, Jan 24 (AFP/APP): Global foreign direct investment flows are set to go through a U-shaped recovery, staying weak in 2021, the United Nations warned on Sunday.

FDI is likely to bottom out this year before picking up again in 2022, said the UN Conference on Trade and Development. “Global FDI flows will remain weak in 2021,” UNCTAD said in its latest Investment Trends Monitor report, with the world still in the grip of the Covid-19 pandemic, which has eviscerated economies.

The UN agency said FDI collapsed last year, falling by 42 percent to from $1.5 trillion in 2019 to an estimated $859 billion in 2020. UNCTAD predicts a further drop of five to 10 percent this year. FDI finished 2020 more than 30 percent below the trough after the global financial crisis in 2009, and at a level last seen in the 1990s, the report said.

“The decline of global FDI will bottom out in 2021, and a real recovery will start in 2022,” James Zhan, UNCTAD’s investment and enterprise director, told reporters in Geneva. “Overall, the global FDI is likely to follow a U-shaped recovery, unlike global trade and GDP (gross domestic product), which have been predicted to be a V-shaped recovery starting already 2021.”

The ongoing risks surrounding the coronavirus pandemic, the speed at which vaccination campaigns can be rolled out, and sluggishness in releasing economic aid will put the brakes on an FDI comeback this year, he explained.

“Investors are likely to remain cautious in committing capital to new overseas productive assets,” said the report.

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