Global foreign direct investment (FDI) fell by less than previously thought last year and is forecast to rise this year and next year, although its flow will stay below the peak seen 10 years ago, the UN said on Wednesday.
FDI, which largely comprises cross-border mergers and acquisitions and investment in start-up projects abroad, slipped by 2 percent last year, much less than the 13 percent fall suggested by preliminary figures in February.
FDI is a bellwether of globalization and a potential sign of the growth of corporate supply chains and future trade ties.
This year, it is expected to increase thanks to higher economic growth expectations, a resumption of trade growth and increasing corporate profits, the UN Conference on Trade and Development said.
“Policy uncertainty and geopolitical risks could hamper the recovery, and tax policy changes could significantly affect cross-border investment,” the UN agency said in a report.
The outlook was cautiously optimistic for most regions, except for Latin America and the Caribbean, because of their uncertain macroeconomic and policy outlook, the report said.
The US remained the top FDI recipient last year, with inflows increasing 12 percent to US$391 billion, followed by Britain, which was pushed up into second position by several megadeals and welcomed US$254 billion of FDI in total.
China was in third position, but slipped 1 percent from last year to US$134 billion, the report said.
FDI flows have repeatedly undershot forecasts because of the stuttering recovery after the global financial crisis.
In 2007, FDI flows hit an estimated US$1.9 trillion, the highest on record, the report said.
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