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Global foreign direct investment rises to pre-crisis levels, UN reports

English.news.cn   2014-01-29 06:45:26

UNITED NATIONS, Jan. 28 (Xinhua) -- Global foreign direct investment (FDI) rose to levels not seen since the start of the global economic crisis in 2008, increasing by 11 percent in 2013 to an estimated 1.46 trillion U.S. dollars, with the lion's share going to developing countries, said a UN report released on Tuesday.

FDI flows to developing economies reached a new high of 759 billion dollars, accounting for 52 percent, and transition economies also recorded a new high of 126 billion dollars, 45 percent up from the previous year and accounting for 9 percent of the global total, showed the figures provided by the UN Conference on Trade and Development.

But developed countries remained at a historical low, or 39 percent, for the second consecutive year. They increased by 12 percent to 576 billion dollars, but only to 44 percent of their peak value in 2007, with FDI to the European Union (EU) increasing, while flows to the United States continued their decline.

Although inflows to developed countries appear to be recovering over 2012, the picture is mixed: despite positive signs of recovery in some developed country regions such as parts of the EU, flows to the United States failed to reverse their decline, contrary to other signs of economic recovery over the past year, said the report.

Inflows to Japan rose by 61 percent to 2.8 billion dollars, but Australia and New Zealand saw sharp declines of 28 percent to 40 billion dollars and 75 percent to 0.5 billion dollars, respectively, it said.

The increase for developing economies was mainly driven by Latin American and the Caribbean, and Africa, while developing Asia, the world's largest recipient region for FDI, saw flows at a level similar to 2012, the report said.

Total inflows to developing Asia, comprising East Asia, South Asia, South-East Asia and West Asia, amounted to an estimated 406 billion dollars in 2013, a level similar to 2012.

The performance of sub-regions continues to diverge, with FDI growth rates ranging between 3 percent in South Asia (33 billion dollars), 2 percent in South-East Asia (116 billion dollars), 1 percent in East Asia (219 billion dollars) and a drop of 20 percent in West Asia (down to 38 billion dollars).

With inflows to China at an estimated 127 billion dollars, including both financial and non-financial sectors, the country again ranked second in the world, closing the gap with the United States to some 32 billion dollars. India experienced a 17 percent growth to 28 billion dollars, despite unexpected capital outflows in the middle of the year.

FDI growth slowed in the Association of Southeast Asian Nations (ASEAN), as inflows to Singapore, the largest recipient in South- East Asia, stagnated at 56 billion dollars. But prospects for the group continue to be promising, as more FDI arrives from China and Japan in a wide range of sectors, including infrastructure, finance and manufacturing.

West Asia's two main recipients, Saudi Arabia and Turkey, registered significant declines of 19 percent to 9.9 billion dollars and 15 percent to 11 billion dollars, respectively. Turkey witnessed virtually no large FDI deals. In addition, the worsening political instability in many parts of the region have caused uncertainty and negatively affected investment.

Flows to Latin America and the Caribbean increased by 18 percent, the fourth consecutive year of growth, to an estimated 294 billion dollars. While in previous years growth was largely driven by South America, in 2013 Central America and the Caribbean were the main recipients, with increases of 93 percent and 38 percent respectively. Flows to South America declined by 7 percent.

The 18-billion-dollar acquisition of Grupo Modelo in Mexico explains most of Central America's increase, while the strong rise in the Caribbean was mainly driven by the British Virgin Islands, said the report.

The decline of flows to South America came after three years of strong growth bolstered by the strength of commodity prices that fueled rising profits on investment, as well as reinvested earnings in mining.

Decreasing commodity prices seem to have brought a stop to this boom, especially in countries such as Chile, with a drop of 33 percent to 20.4 billion dollars and Peru, with a drop of 2 per cent to 12 billion dollars.

In addition, FDI to Brazil, the largest recipient in the sub- region, with 47 percent of South America's total in 2013, declined by a slight 3.9 percent, but remained significant at 63 billion dollars. Nevertheless, this decline should be seen in the context of strong growth in previous years that boosted FDI in Brazil to historical highs.

Inflows to Africa rose by 6.8 percent to an estimated 56.3 billion dollars, due to the strong performance of Southern Africa, including South Africa and Mozambique which experienced record levels of more than 10 billion dollars and 7 billion dollars respectively, as well as lower levels of divestment in Angola compared to previous years.

Persistent political and social tensions continued to subdue flows to North Africa, where only Morocco registered solid growth of 24 percent to 3.5 billion dollars. Nonetheless, there are signs that investors are ready to return to the region, with many big cross-border deals targeting Egypt. In Sub-Saharan Africa, Nigeria 's lackluster performance (5.5 billion dollars) is the result of a retreat from the oil industry.

Transition economies experienced a significant 45 percent rise, reaching a record level of an estimated 126 billion dollars, with Russia jumping by 83 percent to 94 billion dollars, making it the world's third largest recipient for the first time ever.

Editor: Mu Xuequan
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