The coronavirus crisis is expected to drag foreign direct investment down by up to 40 percent this year, with a recovery not expected until 2022, UN economists said Tuesday.
A report by the United Nations Conference on Trade, Investment and Development (UNCTAD) found that lockdowns and the prospect of a deep global recession had dramatically shrunk FDI, which is a measure of cross-border private sector investment.
The agency said that worldwide, FDI was 49 percent lower during the first half of 2020 than during the same period in 2019 — and that every major form of foreign investment took a hit, ranging from infrastructure funding to mergers and acquisitions.
“The decline was quite drastic,” James Zhan, UNCTAD’s investment and enterprise chief, told a virtual press conference.
The rate of decline is expected to slow in the second half of 2020, resulting in a drop of 30 to 40 percent over the whole year, with FDI expected to retract much more moderately in 2021 before recovering in 2022.
“The outlook remains highly uncertain, depending on the duration of the health crisis and on the effectiveness of policy interventions to mitigate the economic effects of the pandemic,” Zhan said.