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Global flows of FDI recover 70% of the loss due to Covid-19

The increase in global FDI flows in the first two quarters of 2021 recovered more than 70% of the loss induced by the Covid-19 pandemic in 2020, reported the United Nations Conference on Trade and Development (UNCTAD).

These flows in the first half of the current year reached an estimated $ 852 billion, showing a stronger than expected recovery momentum, according to UNCTAD’s Investment Trends Monitor published on October 18.

“The rapid recovery in FDI and the optimistic outlook mask the growing divergence in FDI flows between developed and developing economies, as well as the delay in a broad recovery of new investment in productive capacity. Furthermore, uncertainties remain plentiful,” said James Zhan, UNCTAD’s director of investment and business.

In particular, developed economies record the largest increase

Uneven rebound/recovery growth

For their part, developed economies saw the largest increase, with FDI reaching an estimated $ 424 billion in the first half of 2021, more than three times the exceptionally low level in 2020.

FDI

In Europe, although most of the growth was due to setbacks in countries with significant driving movements, several large economies experienced substantial increases, remaining on average just 5% below pre-pandemic quarterly levels.

Meanwhile, inflows into the United States increased by 90%, driven entirely by an increase in cross-border mergers and acquisitions.

Also FDI flows in developing economies increased significantly, totaling $ 427 billion in the first half of 2021, with an acceleration of growth in East and Southeast Asia (+ 25%), a recovery to almost pre-pandemic levels in Central America and South America and rallies in several other economies in Africa and West and Central Asia.

Of the total “recovery increase” in global FDI flows in the first half of 2021 of $ 373 billion, 75% was recorded in developed economies.

High-income countries more than doubled quarterly FDI inflows from 2020 lows, middle-income economies saw a 30% increase, and low-income economies a further 9% decline.

 

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