|
||
|
TWN
Info Service on Finance and Development (Oct22/04) Geneva, 21 Oct (Kanaga Raja) — Global foreign direct investment (FDI) flows reached an estimated $357 billion in the second quarter (Q2) of 2022 , down 31% from the first quarter (Q1) and 7% less than the quarterly average of 2021, the UN Conference on Trade and Development (UNCTAD) has said. In its latest Global Investment Trends Monitor (Issue No. 42), UNCTAD said that the downshift in FDI in Q2 2022 reflects a shift in investor sentiment due to the Ukraine war, the food, fuel and finance crises around the world, rising inflation and interest rates, and fears of a coming recession. UNCTAD said that flows over the first half of 2022 were still 14% up as the strong growth momentum of 2021 was maintained in the first quarter. According to the Investment Trends Monitor, flows to developed economies were 22% lower in the second quarter of 2022 compared to the average of 2021, at an estimated $137 billion. In Europe, flows to the European Union (EU) countries were up 7%, while in European countries outside the EU inflows fell by more than 80%, it said. Inflows in North America were 22% lower as cross-border mergers and acquisitions (M&As) targeting United States firms more than halved, said UNCTAD. “FDI flows to developing economies as a group showed resilience, increasing by 6% to $220 billion, but driven mostly by continued growth in several large emerging economies,” it added. UNCTAD said flows to Latin America and the Caribbean and to developing Asia were up, maintaining strong first quarter momentum, while flows to Africa nearly dried up completely. Highlighting FDI trends in selected emerging economies in the first half of 2022, UNCTAD said China reported a continued upward trend, with 18% higher inflows in the second quarter compared to last year and strong investment in high-tech industries. It said that most ASEAN (Association of South-East Asian Nations) economies reported lower inflows in Q2, with Malaysia and Viet Nam being the exceptions (+37% compared to 2021 and +15%, respectively). UNCTAD said FDI inflows to India were significantly higher in both Q1 and Q2, on course to exceed the record level seen in 2020, while greenfield investment project announcements remained buoyant. Flows to Brazil remained strong in both Q1 and Q2, at more than 80% above the level of 2021, mainly driven by high reinvested earnings, while flows to Mexico were sharply lower in Q2 after strong inflows in Q1, it added. “Inflows to South Africa were down 80% compared to the anomalously high level of 2021, but remained sizable historically.” New investment project announcements, an indicator of forward trends, weakened in the first three quarters of 2022, said UNCTAD. It said that the number of greenfield project announcements (mostly in industry) fell by 10%, while the number of international project finance deals (mostly in infrastructure) stagnated at the 2021 level. In both cases, said UNCTAD, monthly numbers show a downward trend. The biggest declines in new investment project announcements were registered in developed economies, in Latin America and in Central Asia. “Project numbers fell across most industries, with few exceptions, notably in extractives and petrochemicals.” Greenfield project values still increased due to a few large announcements concentrated in electricity and gas supply, said UNCTAD. UNCTAD said that the outlook for global FDI in 2022 remains bleak due to the multiple ongoing geopolitical and economic crises. “Tightening financial conditions and heightened investor uncertainty are visible in the declining monthly trends in new project announcements.” Lingering strong financial results of multinationals following the record profits in 2021, and continued growth in individual emerging markets could dampen the downward effect, said UNCTAD. Shifting needs in the energy sector could also push up investment in selected industries, it added. +
|
||
