New estimates from the United Nations Conference on Trade and Development (UNCTAD) show a decline in global foreign direct investment (FDI). According to the UNCTAD’s Investment Trends Monitor, global FDI has dropped 41 per cent to $470 billion in the first half of 2018 from $794 billion at the same period in 2017.
The figures contained in the Monitor are released ahead of UNCTAD’s World Investment Forum 2018.
Despite the drop, China, is the largest recipient of FDI in the world for the period indicated in 2018 – raking in some $70 billion, UNCTAD says.
The drop was due to large repatriations of accumulated foreign earnings by US companies from affiliates abroad following the country’s tax reforms. Incidentally, the decline is concentrated in developing countries where FDI inflows fell sharply by 69 per cent to an estimated $135 billion – significantly affected by negative inflows in Ireland at negative $181 billion and Switzerland negative $77 billion, a strong decrease in the US negative 73 per cent to $46 billion.
FDI to developing countries, UNCTAD estimated declined slightly in the first half of the year to $310 billion negative 4 per cent lower than in the first half of 2017, however, share of developing economies in global FDI reached 66 per cent.
But the trend in FDI flows contrast with the trend in cross-border Merger and Acquisitions (M&A) and the announced greenfield investments. While M&A has remained flat in the first half of 2018 at $371 billion, investments in greenfield projects have recovered to $454 billion, which is an increase of 42 per cent from relatively low levels in 2017.
According to the Monitor, among developing regions, flows remained almost flat in Africa and declined in developing Asia, negative 4 per cent and in Latin America, and the Caribbean, negative 6 per cent.
“China was the largest recipient of FDI in the world; developing Asia remains the largest host region, accounting for 47 per cent of global FDI in the first half of 2018,” it said.
By Emmanuel K. Dogbevi
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