Inflows of global foreign direct investment (FDI) fell 49.0 per cent in the first half (H1) of the current year ‘due to the economic fallout from Covid-19’.
The latest Global Investment Trends Monitor, released by the United Nations Conference on Trade and Development (UNCTAD) on Tuesday, unveiled the statistics.
The UN agency said that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.
It also estimated that inflow of FDI in Bangladesh declined by around 19 per cent to $1164.30 million during the period under review from $1437.0 million in the same period of 2019.
UNCTAD, however, estimated the half-yearly FDI figure of Bangladesh on the basis of the actual data of the first quarter (Q1) or January-March period.
So far, Bangladesh Bank has unveiled the FDI figure of Q1 of 2020 which showed that net inflow of FDI in Bangladesh stood at $582.17 million, declined by 43.78 per cent from $1035.56 million in Q1 of 2019.
GLOBAL SCENARIO: “The FDI decline is more drastic than we expected, particularly in developed economies. Developing economies weathered the storm relatively better for the first half of the year,” said James Zhan, UNCTAD’s investment and enterprise director. “The outlook remains highly uncertain.”
According to the report, developed economies saw the biggest fall as FDI reached an estimated $98 billion in January-June period, recording a decline of 75.0 per cent compared to the same period of 2019.
“The trend was exacerbated by sharply negative inflows in European economies, mainly in the Netherlands and Switzerland,” said the UNCTAD report.
FDI flows to North America fell by 56.0 per cent to $68 billion during period under review.
Developing economics saw 16.0 per cent decline in FDI flows mainly to due to ‘resilient investment in China.’
Overall inflows decreased by just 12.0 per cent in Asia but were 28 per cent lower than in 2019 in Africa and 25.0 per cent lower in Latin America and the Caribbean.
UNCTAD report also said that in the six months to June 2020, developing countries in Asia accounted for more than half of global FDI.
Flows to economies in transition were dropped by 81.0 per cent due to a strong decline in the Russian Federation.
UNCTAD report also showed that cross-border Merger and Acquisition (M&A) values reached $319 billion in the first three quarters of 2020. The 21.0 per cent decline in developed countries, which account for about 80.0 per cent of global transactions, was checked by the continuation of M&A activity in digital industries.
“The value of greenfield investment project announcements – an indicator of future FDI trends – was $358 billion in the first eight months of 2020,” it said.
It also mentioned that the announced greenfield projects in Bangladesh fell by 78.0 per cent during the period under review.
The number of announced cross-border project finance deals declined by 25 per cent, with the biggest drops in the third quarter of 2020, suggesting that the slide is still accelerating.