Reviews & Outlooks | |
Reviews & Outlooks | |
4187 VIEWS | |
![]() |
Wednesday, January 23,
2019 08.14AM / By UNCTAD
Global FDI flows fell by 19% in 2018 according to UNCTAD; but 2018 FDI flows to Africa increased 6% from $38b to $40b. Huge gains for South Africa (446%), Egypt up 7%, while Nigeria came down 36%, to $2.2.b in 2018 and was overtaken by Ghana who received $3.3b.
Kindly
Download PDF Report Here
Developed
nations feel the pinch as foreign direct investment (FDI) bottoms out in 2018
to levels last seen during the global financial crisis.
Global
foreign direct investment (FDI) fell by nearly a fifth in 2018 to an estimated
$1.2 trillion from $1.47 trillion in 2017, according to the latest UNCTAD Global Investment Trends Monitor
released on 21 January.
The
drop, the third in as many years, brings FDI flows back to the low point
reached after the global financial crisis, with the decline concentrated in
developed countries where inflows fell by as much as 40% to an estimated $451
billion.
“The
underlying FDI trend has shown anemic growth since the global financial crisis
and has been on a downward trajectory since 2013,” James Zhan, Director of
UNCTAD's Investment Division said.
“The
factors behind this negative trend, such as lower profitability of foreign
investment and shifts in global value chains, are not changing in the near
future. The macro-economic backdrop is also deteriorating," he said.
According
to UNCTAD, the 2018 FDI decline stems from corporate income tax reform in the
United States. From 2017, United States multinational enterprises have
embarked on a large repatriation of accumulated foreign earnings, a move which
has hit Europe hard.
In
2018, Europe’s foreign investment inflows amounted to $100 billion – an
unprecedented 73% decline – and a value last seen in the 1990s. The United
States also saw its inflows dip to $226 billion, a decline of 18%.
In
contrast, global cross-border mergers and acquisitions were up 19% and
announced greenfield investments were positive, up 29%, indicating that FDI
could improve in 2019.
Holding the Fort
Meanwhile,
developing economies’ FDI flows have been more resilient.
UNCTAD
shows that FDI to developing economies increased by 3% to $694 billion in 2018.
Developing nations accounted for half of the top 10 host economies for FDI
inflows.
Of
the developing economies, Asia and Africa benefited the most, with flows
increasing to developing countries in Asia by 5%.
East
and South-East Asia, where inflows were up 2% and 11% respectively, took the
lion’s share of foreign investment, accounting for one-third of global FDI in
2018 and almost all growth in FDI to developed economies.
“South
East Asia is the main FDI growth engine,” said Mr. Zhan, with the region
rebounding from a dip in 2017, buoyed by growth in Indonesia and Thailand.
Greenfield
announcements in developing economies rose by 47% reaching an estimated $539
billion and linked to Asian growth prospects.
African
FDI flows were up 6%, though growth was concentrated only in a few countries
such as Egypt and South Africa.
“Slow
economic recovery in Latin America and the Caribbean saw flows drop by 4%,” Mr.
Zhan added.
Challenging World Stage
While
the outlook is more positive for 2019 with a rebound expected, Mr. Zhan says
there are still many uncertainties facing the global economy.
“Beyond
the immediate impact of economic headwinds, the underlying trends for global
FDI remain weak, driven by one-off factors such as tax reforms, megadeals and
volatile financial flows,” says Zhan.
“As
the initial flood of earnings repatriations in the United States abate, things
will normalize rebounding to ‘average’ levels of inflows. But the outlook for
the global economy is darkening, underpinned by structural factors in the
economy.”
These
include policy factors, trade tensions and a return of protectionist
tendencies.
In
addition, the strengthening of the digital economy and thus a shift toward
intangibles in international production will play a role, alongside significant
declines in FDI returns, already evident over the past five years.
Kindly Download PDF Report Here
Related News
1.
Discourse
on Nigeria’s Investment Outlook 2019
2.
NSR
H1 2019 (8) - Nigerian Fiscal - More Strain On FG Finances
3.
Fitch
Ratings: Global Growth Outlook Dented Not Dismantled
4.
NSR
H1 2019 (7) - Monetary Policy - Maintaining The Narrative
5.
Surviving
Uncertain Times in the Nigerian Financial Market
6.
NSR
H1 2019 (6) - Nigerian Inflation - Boiling Below The Surface
7.
Afrinvest
Economic and Financial Market: 2018 Review and 2019 Outlook - On The Precipice
8.
NSR
H1 2019 (5) - Currency - A Test Of Nerves And Resilience
9.
Coronation
Research Issues 2019 Economic Outlook for Nigeria; A Tale of Two Halves
10. NSR
H1 2019 (4) - Domestic Economy - Stable Growth In Dire Need Of Fresh Impetus
11.
NSR
H1 2019 (3) - Crude Oil - Not Great But Not All Gloom Either
12. Meristem
2019 Outlook Report - Resilience in Vulnerability
13. NSR
H1 2019 (2) - MEA Region: A Year of Fragile Growth
14. NSR
H1 2019 (1) - Global Growth: New Year, Same Rhetoric, Matching Growth
15.
5
Key Global Developments to Watch in 2019
16. Nigeria
Outlook 2019: Sailing Through The Storm
17.
FSDH
Research Expects Modest Recovery in Equities’ Market in 2019
18. Nigeria
Economic Outlook Conference 2019
19. Nigeria-Based
Access Bank And Diamond Bank Ratings Affirmed On Announced Merger; Outlook
Stable
20. Fitch
Places Diamond and Access on Rating Watch on Merger Announcement
21. Nigeria
2019 Outlook - As The Dominoes Fall