The United Nations Conference on Trade and Development (UNCTAD) on Wednesday said that global foreign direct investment (FDI) flows showed a strong rebound in 2021, up 77% to an estimated $1.65 trillion, from $929 billion in 2020, surpassing their pre-Covid-19 level.
As per the report, flows to India were 26% lower, mainly because large merger and acquisition deals recorded in 2020 were not repeated.
As per the UNCTAD Investment Trends Monitor, the outlook for global FDI in 2022 is positive.
“The 2021 rebound growth rate is unlikely to be repeated. The underlying trend – net of conduit flows, one-off transactions and intra-firm financial flows – will remain relatively muted, as in 2021,” it said.
The Geneva-based organisation said that international project finance in infrastructure sectors will continue to provide growth momentum.
“The protracted duration of the health crisis with successive new waves of the pandemic continues to be a major downside risk. The pace of vaccinations, especially in developing countries, as well as the speed of implementation of infrastructure investment stimulus, remain important factors of uncertainty,” UNCTAD said.
Other important risks, including labour and supply chain bottlenecks, energy prices and inflationary pressures will also affect results, according to the agency.
Country mix
China saw a record $179 billion of inflows – a 20% increase – driven by strong services FDI. The Association of Southeast Asian Nations or ASEAN resumed its role as an engine of growth for FDI in Asia and globally, with inflows up 35% and
increases across most members.
Developed economies saw the biggest rise by far, with FDI reaching an estimated $777 billion in 2021 – three times the exceptionally low level in 2020, UNCTAD said.
FDI flows in developing economies increased by 30% to nearly $870 billion, with a growth acceleration in East and South-East Asia (+20%), a recovery to near pre-pandemic levels in Latin America and the Caribbean, and an uptick in West Asia. Inflows in Africa also rose.
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