Foreign direct investment in the world down sharply in 2020

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Economists from UNCTAD, the United Nations Conference on Trade and Development, presented a report on investment in the world in 2020 on Tuesday. According to their conclusion, FDI, foreign direct investment in the world are in sharp decline in 2020.

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In their report,

UNCTAD

economists

point out that in the first half of the year, global foreign direct investment fell almost by half, to $ 399 billion, compared to the same period last year.

However, economists expect the fall to slow down in the second half of the year, ultimately resulting in

a 30-40% drop

for this year. 

FDI translates into investments that companies make outside their territory, which allows them to internationalize.

But because of the health crisis, they preferred to preserve their cash flow and postpone planned investments. 

The study shows that rich countries are the most affected by the decline in foreign direct investment.

During the first half of the year, FDI collapsed 75% to $ 98 billion, which had not been seen since 1994.

For the first time, investment flows to Europe were negative in the first half of the year, at minus $ 7 billion against $ 202 billion a year earlier.

Italy, the United States, Brazil and Australia suffered the greatest losses.

Conversely, FDI to China held up and the fall was less severe for developing economies.

Unctad forecasts expect a smaller drop in FDI in 2021, in the order of 5 to 10%, before starting to recover in 2022.

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See also: European Union: the foreign investment control mechanism enters into force

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