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UN report: Foreign direct investments collapse by half worldwide


The corona crisis is causing foreign direct investments to shrink by around half. This time it will hit the industrial nations particularly hard.

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Construction site of a foreign chip factory in Germany (archive)

Photo: Patrick_Pleul / picture-alliance / dpa / dpaweb

According to the United Nations, foreign direct investment fell dramatically worldwide in the first half of the year.

Compared to the same period of the previous year, the decrease is around 50 percent, reports the UN Conference on Trade and Development (Unctad) in Geneva.

"This is more drastic than we expected for the whole year," said Unctad economist James Zhan.

In June, the Unctad had assumed a slump of 40 percent - that would also have been the strongest slump since 2005.

According to the Unctad report Global Investment Trends Monitor, companies around the world are holding back from investing abroad due to the corona crisis and are re-evaluating many planned projects.

All regions of the world would suffer a lot, but the industrialized countries in particular: In the first six months of the year, foreign direct investment fell by around 75 percent compared to 2019.

"Developing countries weather storm better"

"The developing countries weathered the storm better in the first half of the year," said Zhan.

"The outlook is still extremely uncertain."

The situation will probably not change significantly in the second half of the year.

A moderate recovery in direct investment is expected for 2021.

Unctad focuses on promoting trade in and with developing countries.

Foreign direct investment is seen as a means to lift these countries out of poverty.

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caw / dpa-AFX

Source: spiegel

All business articles on 2020-10-27

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