InvestorQ : How have global FDI flows been like in the midst of the Coronavirus pandemic? Have the FDI flows been impacted?
Rutuja Nigam made post

How have global FDI flows been like in the midst of the Coronavirus pandemic? Have the FDI flows been impacted?

Answer
image
4 weeks ago
Follow

The body that promotes trade, UNCTAD, has warned about a sharp slowdown in FDI or foreign direct investment flows in this year. According to a report by the United Nations Conference on Trade and Development or UNCTAD, FDI flows across the world fell by 49%.

This pertains only to the first half of the year 2020 and it was largely on account of the COVID pandemic and its lag effect. The developed economies saw a bigger fall in FDI to the tune of almost 75% as compared to the emerging markets of Asia and Latin America.

The reasons are not far to seek. The prospects of a deep recession forced most MNCs to reassess their new projects, hitting FDI in a big way. There was some good news for EM. The FDI flows into emerging markets fell by just 25%, compared to 50% for developed economies.

This is largely on the back of the interest that global FDI investors evinced in China. In the first six months of 2020, Asia accounted for 50% of all the FDI flows in the world. This was largely led by flows into China that has been at the forefront of the recovery.

However, in the case of developed economies in Americas and Europe, the fall in FDI was more than compensated for by the boost to M&A, especially in the digital space. Greenfield projects worth $358 billion have been announced till Aug-20 and the money flows will determine the seriousness of these FDI flows.

3 Views