Overall, the global FDI is likely to follow a U-shaped recovery, unlike global trade and GDP , which have been predicted to be a V-shaped recovery starting already 2021. — Reuters pic
“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 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.
“Investors are likely to remain cautious in committing capital to new overseas productive assets,” said the report.Green-field project announcements — considered an indicator of future FDI trends — were 35 per cent down in 2020, figures that “do not bode well for new investment in industrial sectors in 2021”, said the report.
International investment projects tend to have a long gestation period and react to crises with a delay, both on the downward slope and in the recovery. Mergers and acquisitions bounced back in the second half of 2020, especially in the tech and healthcare sectors, which are not as affected by the pandemic as other sectors.