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■ UNCTAD Global Investment Trends Monitor No.10 (released on Oct. 23, 2012) - Summary
- Global foreign direct investment (FDI) inflows declined 8 percent year-on-year to USD 668 billion in the H1 of 2012, reflecting the increasing uncertainty over the global economy caused by the European fiscal crisis and sluggish emerging markets.
Global FDI inflows and growth from 2007 to 2011 and in the first half of 2011 and 2012 (%)
Source: UNCTAD. * revised, ** estimated, acronym: H1-first half of the year
- The 8 percent decline worth USD 61 billion mostly came from America with USD 37 billion and BRICS countries with USD 23 billion.
- The decrease was due largely to Greenfield investment (40%) and cross-border M&As (60%). The huge losses on Greenfield project and cross-border M&As were offset by substantial reinvestment of retained earnings of each country, which cut the figure down to 8 percent.
- With the dramatic decrease in FDI inflows to America and EU, developing economics saw an unprecedented half of the total global FDI inflows. China became the biggest beneficiary of the global FDI inflows though the figure decreased a bit. The global FDI inflows to advanced economics dropped 9.5 percent.
- The FDI inflows differed across the globe. Asia saw a decline in FDI inflows (-11%), while Latina America and Africa posted the increase of 8 percent and 11percent, respectively. Among advanced economies, FDI flows to non-EU countries grew strongly, while that of EU countries fell. Japan still saw its FDI outflows rise.
- UNCTAD estimated the global FDI inflows would be less than USD 1.6 trillion. The global economic recovery still remains precarious, which is expected to undermine consumption and provoke protectionist policies. Under the uncertain circumstance, many multinational companies will take wait-and-see approach to FDI.