UNCTAD "Global FDI to Drop Over 40% This Year... Recovery Expected from 2022"

[Asia Economy Reporter Naju-seok] Global foreign direct investment (FDI) is expected to show a sharp decline due to the impact of the novel coronavirus infection (COVID-19).

On the 15th (local time), the United Nations Conference on Trade and Development (UNCTAD) forecasted that global FDI this year will fall below $1 trillion (1,207 trillion won). This represents a decrease of more than 40% compared to last year's FDI of $1.54 trillion. Furthermore, global FDI is expected to continue declining by more than 5-10% next year before turning to an upward trend starting in 2022.

Mukhisa Kituyi, Secretary-General of UNCTAD, stated, "The outlook is extremely uncertain," adding, "It will depend on how long the health crisis caused by COVID-19 lasts and how much the measures taken by each country to contain the spread of COVID-19 affect the economy."

UNCTAD viewed that COVID-19 has affected all aspects of FDI demand, supply, and policy. For example, due to lockdown policies and other measures taken by countries to prevent the spread of COVID-19, even already invested FDI has been impacted. Additionally, as the economy is expected to enter a recession, multinational corporations are also reconsidering new investment plans.

The performance outlook for multinational corporations, which account for the majority of global FDI, is also rapidly deteriorating. These approximately 5,000 companies are expected to see their performance drop by about 40% this year. Some industries are even predicting losses.

James Zhan, Director of Investment and Enterprise at UNCTAD, predicted, "Although every region worldwide will suffer serious damage, there are regional differences," adding, "Developing countries that relied heavily on overseas investment within the global supply chain will be severely affected due to their high dependence on FDI."

This content was produced with the assistance of AI translation services.