London, Friday, 23 July 2022
UNCTAD: Flows of Foreign Direct Investment (FDI) Recovered to Pre-Pandemic Levels Reaching $1.6 trillion in 2021
Foreign direct investment (FDI) flows restored to pre-pandemic levels in 2021, hitting $1.6 trillion, but the outlook for this year is less promising, according to the most recent UNCTAD study published on Thursday.
India, the US, China, Hong Kong (China), Singapore, Canada, Brazil, South Africa, Russia, and Mexico made up the top 10 economies for FDI inflows in 2021.
According to the research "International tax reforms and sustainable investment," developing nations need major assistance from the global community to manage uncertainty and risk aversion.
The report stated that even though global FDI flows should remain relatively stable in value terms, new project activity is likely to suffer more from investor uncertainty. "UNCTAD foresees that the growth momentum of 2021 cannot be sustained and that global FDI flows in 2022 will likely move on a downward trajectory, at best remaining flat," it added.
The report claims that the Russia-Ukraine war disrupted the investment environment in 2022, leading to a crisis of skyrocketing food and gasoline costs.
"Investments in the Sustainable Development Goals (SDGs), productive capacity, and climate change adaptation are all urgently needed. There are mixed investment patterns at the moment in these sectors "the United Nations Conference on Trade and Development's Secretary-general, Rebeca Grynspan, noted (UNCTAD).
Due to booming merger and acquisition activity and a sharp increase in international project finance, worldwide FDI flows increased 64% to $1.58 trillion in 2021.
The greatest level ever recorded for flows to developing economies, $837 billion, was achieved, mostly as a result of growth in Asia.
For the third year in a row, FDI inflows to developing Asia, which receives 40% of all FDI worldwide, increased to an all-time high of $619 billion in 2021. FDI increased in China by 21%, but South Asia suffered a decline of 26% as flows to India decreased to $45 billion.
The UNCTAD research states that global SDG investment increased 70% in 2021. However, energy efficiency and renewable energy saw the bulk of the rebound rise.
According to the research, "investment activity in most SDG-related sectors in emerging nations, as measured by project numbers, remains below pre-pandemic levels" even while the 2021 recovery in value terms is promising.
Source: UNCTAD // Research and edit by: The Decision Maker – FDI editors