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22|06|2016

Foreign direct investment worldwide returns to pre-crisis levels

Source: EFE

Foreign direct investment worldwide in 2015 was 1.76 billion dollars, the highest figure since pre-crisis levels, according to a report published by the United Nations Conference for Trade and Development (UNCTAD).

Generally speaking, foreign direct investment (FDI) worldwide in 2015 was "robust", according to the report, up 38% from the previous year, with a total of 1.76 billion dollars.

The main explanation for the global increase was a sharp rise in international mergers and acquisitions (M&As), from 432 billion in 2014 to 721 billion dollars. Specifically, these mergers and acquisitions were made by large multinationals, many of which moved their head offices for strategic and tax reasons.

The report points out that not counting this "major restructuring", the global increase in FDI would be much more moderate at around 15 %.

FDI towards developed countries almost doubled in 2015 compared to 2014, at 962 billion dollars.

As a result, the percentage of rich economies in FDI increased from 41% in 2014 to 55% in 2015, "reversing a five-year trend in which economies in transition and developing countries were the main recipients of global FDI".

Developing countries received a record-breaking 765 billion dollars in FDI, an increase of 9% compared to 2014, particularly in Asia.

However, flows towards Africa and Latin America and the Caribbean "dwindled".

Specifically, the main countries receiving FDI in 2015 were: United States, Hong Kong, China, Ireland, Netherlands, Switzerland, Singapore, Brazil, Canada, India, France, United Kingdom, Germany, Belgium, Mexico, Luxembourg, Australia, Italy, Chile and Turkey.

In terms of outgoings of FDI, developed countries invested 1.1 billion dollars, an increase of 33% over 2014.

In total, they were responsible for 72% of global FDI, an increase of 61% over 2014.

Europe continues to be the region that invests most, followed by Japan, the United States and Canada.

In contrast, investment from developing countries was down, "due to a combination of challenges including the drop in the prices of raw materials, the depreciation of their currencies and geopolitical risks".

China was the exception, however, and its foreign investments stood at 128 billion dollars, making it the third largest investor in the world after the United States and Japan.
After these three, the largest investors were as follows: Netherlands, Ireland, Germany, Switzerland, Canada, Hong Kong, Luxembourg, Belgium, Singapore, France, Spain, South Korea, Italy, Russia, Sweden, Norway and Chile.

The report notes that in spite of the growth seen in 2015, flows of FDI in 2016 declined in wealthy economies and developing countries, with the exception of large mergers and acquisitions.

The UN agency also highlighted "geopolitical risks" and regional tensions that could deepen the recession this year.

However the UNCTAD economists predict that growth will return in 2017 and that FDI in 2018 will exceed 1.8 billion dollars in 2018
 

 

Last updated: 05|09|2016

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