BusinessDay

Global FDI rebounds by 77% in 2021

Global Foreign Direct Investment (FDI) recorded a strong rebound in 2021, up 77 percent to an estimated $1.65 trillion from $929billion in 2020, surpassing their pre-Covid-19 level, a new investment trend monitor report shows.

The report by United Nations Conferences on Trade and Development (UNCTAD), noted that investor confidence is strong in infrastructure sectors, supported by favourable long-term financing conditions, recovery stimulus packages, and overseas investment programmes.

“The 2021 rebound growth rate is unlikely to be repeated. The underlying trend – net of conduit flows, one-off transactions and intra-firm financial flows – will remain relatively muted, as in 2021,” the report stated.

It also adds that international project finance in infrastructure sectors will continue to provide growth momentum.

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A breakdown of the global FDI figures showed that developed economies saw the biggest rise by far, with FDI reaching an estimated $777 billion in 2021 –three times the exceptionally low level in 2020.

In Europe, more than 80 percent of the increase in flows was due to large swings in conduit economies. Inflows in the United States more than doubled, with the increase entirely accounted for by a surge in cross-border mergers and acquisitions (M&As)

FDI flows in developing economies increased by 30 percent to nearly $870 billion, with a growth acceleration in East and South-East Asia (+20 percent), a recovery to near pre-pandemic levels in Latin America and the Caribbean, and an uptick in West Asia.

Inflows in Africa ($97 billion) also rose as most recipients across the continent saw a moderate rise in FDI; the total for the region more than doubled, inflated by a single intra-firm financial transaction in South Africa in the second half of 2021.

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