Global FDI inflows lose steam, slump to $1.35 trillion in 2012 – UN

Global foreign direct investment (FDI) inflows declined by 18% to $1.35 trillion in 2012 from $1.5 trillion in 2011, according to the 2013 World Investment Report (WIR) published June 26, 2013.

The United Nations Conference on Trade and Development (UNCTAD) report attributed the fall in global FDI inflows to “economic fragility and policy uncertainty for investors”.

The UNCTAD says developing countries for the first time ever received majority of the investment than the developed nations.

“For the first time ever, developing economies absorbed more FDI than developed countries, accounting for 52% of global FDI flows,” said the WIR even though inflows to developing economies “nonetheless declined slightly by 4%, to $703 billion”.

For 2013, UNCTAD forecast that FDI will remain close to the 2012 level, with an upper range of $1.45 trillion.

But the report warns that factors such as structural weaknesses in the global financial system, the possible deterioration of the macroeconomic environment, and significant policy uncertainty in areas crucial for investor confidence might lead to a further decline in FDI flows.

According to UNCTAD, its annual survey of investment trends reports show that recovery to more “vigorous investment levels” will take longer than expected, mostly because of global economic fragility and policy uncertainty.

By Ekow Quandzie