Foreign direct investment in the world

Foreign direct investment in Russia

• Foreign direct investment in Russia

Foreign direct investment in Europe

• Foreign direct investment in Europe

2020

Foreign direct investment in the world decreased by a third, to $1 trillion

Foreign direct investment (FDI) in the world at the end of 2020 amounted to $1 trillion, down from $1.5 trillion a year earlier. The decline was due to a macroeconomic recession caused by the effects of the COVID-19 coronavirus. This is stated in the report of the UN Conference on Trade and Development (UNCTAD) published on June 21, 2021.

UNCTAD Acting Secretary-General Isabel Durand noted that as of the end of 2020, FDI was "almost 20% below the lower level recorded after the global financial crisis more than 10 years ago."

Foreign direct investment in the world in 2020 decreased by a third, to $1 trillion

The current situation has a serious impact on our development expectations, says Duran. - Although the situation is better now than a few months ago and the global economy is recovering faster than initially expected, this recovery is uneven and fragile.

According to forecasts for June 2020, it was expected that global foreign direct investment in 2020 will decrease by 40%

According to the acting head of UNCTAD, in 2021 there are positive signs in the world in the trade in goods, but trade in services weaves far in the tail.

By the end of 2021, foreign direct investment is expected to grow by 10-15% compared to 2020. The FDI flow will partly return lost ground, but it may take time before investing gains speed.

According to the report of the UN Conference on Trade and Development (UNCTAD), the inflow of foreign direct investment in countries with economies in transition in 2020 decreased by 77%, to $13 billion. This is the lowest level of inflow to the region since 2002.

Developing countries received 12% less investment money in 2020 compared to the previous year. Thus, the share of developing countries in global FDI reached 72% - the highest ever. At the same time, China topped the rating of the largest recipients of FDI.^[1]

China leads foreign direct investment ahead of US

At the end of 2020, China became the leader in foreign direct investment, ahead of the United States. This is evidenced by the data of the UN Conference on Trade and Development (UNCTAD). Foreign direct investment includes, for example, the construction of new factories by foreign companies, the expansion of their presence in the country or their acquisition of local companies.

In 2020, $163 billion from abroad was invested in the Chinese economy, which is 4% more than a year earlier, while the American economy attracted about $134 billion (almost half as much as in 2019). In Russia, foreign investment decreased by 96% - from $32 billion to $1.1 billion.

China is the leader in foreign direct investment

According to the BBC, in the United States, foreign investment has been declining since 2016, when it reached a maximum ($472 billion). In China, this figure is constantly growing. Back in 2019, the gap between the countries was almost double: the United States received $251 billion in new foreign investments, and the PRC - from $140 billion.

According to analysts at the British Center for Economic and Business Research (CEBR), thanks to the COVID-19 coronavirus pandemic, China's economy will overtake the American one in 2028 - five years earlier than previously predicted. According to CEBR analysts, China has suffered a much better pandemic and the country's economy is recovering faster than the American one.

Globally, the volume of foreign investment in the year of the pandemic decreased by 42% - from $1.5 trillion in 2019 to $859 billion at the end of 2020. This figure has become the lowest in the 21st century. Even during the global financial crisis, investment was about 30% higher than the current level.

UNCTAD estimates that in the European Union the volume of foreign investment attracted in 2020 fell by 71%. In Germany, the rate of decline reached 61%.^[2]

Notes