FDI in China grew by 2.5 percent in the first 9 months of 2020. Most of the FDI here has been in e-commerce services, special technology services and research and development.
Multinational companies postpone investment to save the decline in global FDI due to fears of deep economic slowdown
United Nations (UN) said on Tuesday that foreign direct investment (FDI) declined by 49% in the first half of 2020 over the same period a year earlier. The report predicts a 40% decline in FDI throughout 2020. The report noted that global FDI has been on the decline due to fears of a deep economic slowdown.
Negative FDI in European economies
According to the report released by the UN Conference for Trade and Development (UNCTAD), negative FDI has been the first in European economies in this period. This time, FDI has been $ 7 billion as against $ 202 billion a year ago. In the US, FDI has fallen 61% to $ 51 billion. The report says that multinational companies have postponed investments to conserve cash. This has resulted in a decline in global FDI.
Decline will be higher than anticipated
Global FDI declined by almost half in the first half of this year, says James Zahn, director of the Investment and Enterprise Division of UNCTAD. James says this decline could be higher than anticipated throughout the year. James said that global FDI could decline by 30 to 40% throughout the year. Whereas in 2021, it is estimated to decline by 5 to 10%.
Estimates released based on cross border merger and acquisition
The UN has released this estimate based on cross border merger, acquisitions, new greenfield investment projects and project finance deals. The report noted that there has been a drastic reduction in investment in industrialized countries with around 80% stake in global FDI. Only 98 billion dollars have been invested in these countries.
FDI remained stable in China
According to the UN report, Italy, the United States, Brazil and Australia, among the major countries receiving FDI in 2019, declined in the first half of 2020. However, China has broken this trend. According to the latest data, FDI in China increased by 2.5 percent in the first 9 months of 2020. Most FDI in China has been in e-commerce services, special technology services and research and development.
