Global Foreign Direct Investment Halved Due to COVID-19 Impact

UNCTAD "FDI in First Half of This Year Down 49% YoY"
Advanced Economies Plunge 75%... Asia's Decline Limited to 12% Due to China's Early Recovery Impact

[Image source=AP Yonhap News]

[Asia Economy Reporter Naju-seok] Global foreign direct investment (FDI) in the first half of this year reached only half the level of the same period last year. This is the result of severe investment contraction due to the spread of the novel coronavirus disease (COVID-19). The impact was more pronounced in developed countries than in developing countries.

The United Nations Conference on Trade and Development (UNCTAD) announced on the 27th in its 'Global Investment Trend Monitor' that FDI in the first half of this year decreased by 49% compared to last year.

UNCTAD explained, "As a result of the pandemic, global economic lockdown measures continued, slowing the progress of ongoing investment projects, and multinational corporations began to reassess new projects."

James Zhan, UNCTAD Director of Investment and Enterprise, said, "The decline in FDI was greater than we expected," adding, "It was especially severe in developed countries." Regarding emerging countries, he added, "They fared relatively better than developed countries."

According to UNCTAD, FDI in developed countries fell sharply by 75% compared to the same period last year, totaling $98 billion. This was particularly notable in European countries such as the Netherlands and Switzerland. FDI inflows into North America decreased by 56% to $68 billion.

On the other hand, FDI inflows into developing countries decreased by 16% to $296 billion. Thanks to continued substantial investment in China, Asia's FDI only declined by 12% to $217 billion. China played a key role in overcoming the COVID-19 outbreak early and attracting funds through financial easing measures. As a result, FDI in Asian developing countries accounted for more than half of global FDI in the first half of this year.

FDI in Africa and Latin America decreased by 28% and 25%, respectively.

The scale of cross-border mergers and acquisitions (M&A) recorded $319 billion from January to September this year. M&A in developed countries, which account for about 80% of global transactions, decreased by 21%.

The scale of investment projects, which indicate future FDI trends, recorded $358 billion from January to August this year. The decline in developing countries was 49%, larger than the 17% decrease in developed countries. This is interpreted as developing countries facing more constraints in supporting economic aid packages.

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