Although global Foreign Direct Investment (FDI) fell from $1.81trillion in 2016, to an estimated $1.52trillion in 2017, investment into Africa and other developing countries stood almost firm, latest investment trends monitored by the United Nations has shown.
The Investment Monitor published by the United Nations Conference on Trade and Development (UNCTAD), revealed that a slump in FDI flows to developed countries (-27 percent) was the principal factor behind the global decline.
UNCTAD Secretary-General, Mukhisa Kituyi, insisted that more investment in sectors that could contribute to the Sustainable Development Goals (SDGs) remained badly needed.
“FDI recovery continues to be on a bumpy road. While FDI in developing countries remained at a level similar to the previous year, more investment in sectors that can contribute to the Sustainable Development Goals is still badly needed. Promoting FDI for sustainable development remains a challenge,” Kituyi said.
The publication said investment in Africa remained flat, while FDI to developing economies remained stable, at an estimated $653billion, showing two percent more than the previous year.
In Europe, there was a decrease of -27 percent, while North America stood at -33 percent, mainly due to a return to prior levels of inflows in the United Kingdom, and the United States after spikes in 2016.
Flows rose marginally in developing Asia, and Latin America, and the Caribbean. Developing Asia regained its position as the largest FDI recipient region in the world, followed by the European Union, and North America.
According to the report, FDI for the world’s transition economies, declined by 17 percent to an estimated $55billion, basically because of the drop in Russian Federation, and lacklustre inflows across most of the Commonwealth of Independent States (CIS).
The Director, UNCTAD’s Investment Division, James Zhan, said: “The decline of global FDI flows is in stark contrast to other macroeconomic variables, such as GDP and trade growth, which saw substantial improvements in 2017. Upward synchronisation of the trends in 2018 is probable, but risks are abundant.”
The report noted that higher economic growth projections, trade volumes and commodity prices would normally point to a potential increase in global FDI in 2018.
But elevated geopolitical risks and policy uncertainty could have an impact on the scale and contours of any FDI recovery in 2018.