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In 2020, global foreign direct investment (FDI) will drop sharply, by 42% to US $859 billion from US $1.5 trillion in 2019. At the end of 2020, the level of foreign direct investment will be more than 30% lower than the bottom after the global financial crisis in 2009, and will fall back to the level of the 1990s. This is the main conclusion of the 38th “global investment trend monitoring” report issued by the United Nations Trade and Development Organization (also known as the trade and Development Conference) yesterday.

The decline was mainly concentrated in developed countries, with foreign direct investment flows down 69%, estimated at US $229 billion.

The funds flowing into Europe dried up completely to – 4 billion US dollars, including huge negative inflows from many countries. The United States also saw a sharp decline of 49%, with the inflow of funds falling to $134 billion.

In contrast, FDI in developing economies fell by 12%, estimated at $616 billion. Developing economies accounted for 72 per cent of global FDI, the highest share on record. China tops the list of FDI recipients.

FDI flows in developing regions fell unevenly, with – 37% in Latin America and the Caribbean, – 18% in Africa and – 4% in Asia. East Asia receives the most foreign investment, accounting for one third of global foreign direct investment in 2020. Foreign direct investment in economies in transition fell by 77 per cent to $13 billion.


Foreign direct investment in China led to a sharp decline in capital expenditure in the early stages of the new crown pandemic, but ended with a small increase of 4% at the end of the year.

Foreign direct investment in India has increased by 13% driven by investment in the digital sector.

ASEAN has been the engine of FDI growth over the past decade, with FDI from the regional group falling by 31% in 2020.

Foreign direct investment inflows to the United States have halved, due to a sharp decline in Greenfield Investment (also known as new investment) and cross-border mergers and acquisitions.

Foreign direct investment in the EU fell by two-thirds, with a sharp drop in all the largest recipient countries; foreign direct investment inflows to the UK fell to zero.

Foreign direct investment is expected to remain weak in 2021

Looking ahead, the trend of FDI is expected to remain weak in 2021. According to the announced data, the outlook is mixed and shows continuous downward pressure:

The announcement of green space projects in 2020 has decreased by 35%, indicating that FDI in the industrial sector will not turn for the better.

ยท newly announced international project financing transactions rose in the fourth quarter of 2020, curbing an earlier decline in this area (down – 2% for the year). As a result, international investment in the infrastructure sector is likely to increase, driven by the economic recovery plans of developed countries.

Similarly, the decline of cross-border M & A in 2020 was buffered at the end of the year, with a 10% decline for the whole year. From the M & A announcement, strong trading activities in the technology and pharmaceutical industries are expected to promote the increase of FDI flow driven by M & A.

For developing countries, the trend of green space and project financing announcement is a major problem.

While overall FDI flows to developing economies appear to be relatively resilient, green space announcements have declined by 46% (Africa: – 63%; Latin America and the Caribbean: – 51%; Asia: – 38%), and international project financing by 7% (Africa: – 40%).

These types of investment are critical to the development of productive capacity and infrastructure, and therefore to the prospects for a sustainable recovery.

The risks associated with the latest pandemic, the pace of vaccination and economic support programmes, the fragile macroeconomic situation in major emerging markets and the uncertainty in the global investment policy environment will continue to affect FDI in 2021, according to the organization.

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