Global FDI rebounds in first half of 2021 but recovery highly uneven, UN says

Global foreign direct investment flows rebounded by 78 per cent in the first half of 2021 but the recovery has been uneven around the world, according to the UN.

Developed economies recorded the biggest increase while poor countries reported a decline, the UN Conference on Trade and Development said in its latest Investment Trends Monitor report.

Global FDI rose to an estimated $852 billion in the first six months of 2021, showing a “stronger-than-expected rebound momentum”, the report said. The increase in the first two quarters recovered by more than 70 per cent from the coronavirus-induced loss recorded in 2020.

“While investment flows are back on a recovery path, this recovery is concentrated in the developed world,” James Zhan, director of the investment and enterprise division at Unctad, said during the UN’s seventh World Investment Forum yesterday.

“Developed economies are expected to drive FDI recovery, due to good progress with Covid vaccination programmes and large fiscal stimulus packages,” he said. “When it comes to investment in sectors relevant for the sustainable development goals, greenfield investment and project finance in developing regions dropped dramatically since the pandemic. This leaves behind the more vulnerable countries and puts at risk the achievement of the SDG 2030 Agenda.”

The FDI flows of developed economies hit $424bn in the first half of 2021 – more than three times higher than the exceptionally low flows in 2020, Unctad said.

FDI flows into developing economies also increased significantly, totalling $427bn in the first half, with the pace of growth picking up by 25 per cent in East and South-East Asia.

Investment flows recovered to near pre-pandemic levels in Central and South America while sharp increases were reported in several other economies in Africa and western and central Asia.

Low-income economies recorded a further 9 per cent decline, Unctad data showed.

Investments were concentrated in infrastructure, boosted by favourable long-term financing conditions, recovery stimulus packages and overseas investment programmes, the UN body said.