The World Investment Report 2009 released by the United Nations Conference on Trade and Development (UNCTAD) on the 17th predicts that global foreign direct investment will fall by 30% to 40% in 2009 compared to 2008 due to the continued impact of the global economic and financial crisis.
The report said that in 2008, global foreign direct investment inflows fell by 14% from the previous year to $1.7 trillion.
The downward trend in 2009 was even more pronounced and is expected to fall by 30% to 40%. Under the premise that the global economy will resume normal growth and countries continue to avoid protectionism, foreign direct investment is expected to slowly rebound to 1.4 trillion US dollars in 2010, and will further rebound to nearly 1.8 trillion US dollars in 2011.
According to the report, one of the reasons for the decline in global foreign direct investment is that multinational companies continue to divest to reduce costs and cooperate with corporate restructuring, especially at the end of 2008 and early 2009; in addition, due to financial market austerity and cash shortages of multinational companies The impact of cross-border mergers and acquisitions has decreased drastically. In 2008, the total value of cross-border mergers and acquisitions decreased by 35%, and will be further reduced in 2009. In the first half of 2009, global cross-border M&A amounted to only US$120 billion, compared with US$670 billion in 2008.
The report believes that the current crisis has also changed the regional pattern of foreign direct investment. In 2008, although the growth rate of foreign capital inflows in developing and transition economies slowed down compared with the previous year, it still maintained a sustained growth trend, and its share of global foreign capital inflows rose sharply to 43%. Of the top 20 countries in the world with foreign capital utilization in 2008, half are emerging economies. The amount of foreign capital inflows from South Asia, East Asia, Southeast Asia, Oceania countries, and transition economies in Southeast Europe and the Commonwealth of Independent States (CIS) has set new records. Foreign capital inflows in Africa also increased significantly, reaching a record $88 billion. There has also been considerable growth in West Asia, Latin America and the Caribbean.
The report said that in 2008, global foreign direct investment inflows fell by 14% from the previous year to $1.7 trillion.
The downward trend in 2009 was even more pronounced and is expected to fall by 30% to 40%. Under the premise that the global economy will resume normal growth and countries continue to avoid protectionism, foreign direct investment is expected to slowly rebound to 1.4 trillion US dollars in 2010, and will further rebound to nearly 1.8 trillion US dollars in 2011.
According to the report, one of the reasons for the decline in global foreign direct investment is that multinational companies continue to divest to reduce costs and cooperate with corporate restructuring, especially at the end of 2008 and early 2009; in addition, due to financial market austerity and cash shortages of multinational companies The impact of cross-border mergers and acquisitions has decreased drastically. In 2008, the total value of cross-border mergers and acquisitions decreased by 35%, and will be further reduced in 2009. In the first half of 2009, global cross-border M&A amounted to only US$120 billion, compared with US$670 billion in 2008.
The report believes that the current crisis has also changed the regional pattern of foreign direct investment. In 2008, although the growth rate of foreign capital inflows in developing and transition economies slowed down compared with the previous year, it still maintained a sustained growth trend, and its share of global foreign capital inflows rose sharply to 43%. Of the top 20 countries in the world with foreign capital utilization in 2008, half are emerging economies. The amount of foreign capital inflows from South Asia, East Asia, Southeast Asia, Oceania countries, and transition economies in Southeast Europe and the Commonwealth of Independent States (CIS) has set new records. Foreign capital inflows in Africa also increased significantly, reaching a record $88 billion. There has also been considerable growth in West Asia, Latin America and the Caribbean.
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