English

Global Foreign Direct Investment to grow 3% in 2023

Global Foreign Direct Investment (FDI) inflows grew 3% in 2023, after falling 16.6% in 2022.With this, FDI inflows were 1 trillion 365 billion dollars last year.Likewise, the United Nations Conference on Trade and Development (UNCTAD) reported that international investment project announcements, including new (mainly industrial), project finance (mainly infrastructure) and cross-border mergers and acquisitions, were mostly in negative territory. On the one hand, international project finance and M&A suffered the most from higher financing costs in 2023, with 21% and 16% fewer deals, respectively. On the other hand, greenfield project announcements were 6% lower in number. However, their value increased by 6 percent. In addition, these announcements showed higher numbers in the manufacturing sector in an initial sign of recovery after a long-term downward trend.

Foreign Direct Investment 

FDI flows to developing countries fell 9 percent to $841 billion, and in most regions flows declined or stagnated. FDI declined 12% in developing Asia and 1% in Africa. It remained stable in Latin America and the Caribbean, as Central America bucked the trend. 

Mergers and acquisitions

In developed regions, international investment project announcements declined across the board. M&A values were $280 billion lower than in 2022, directly depressing FDI flows. While project finance deals were $157 billion lower, lower values of greenfield project announcements will affect FDI flows in 2024. In the United States, the largest recipient of FDI, FDI inflows in 2023 declined 3 percent, and China reported an unusual decline in FDI flows (-6 percent).In Latin America, Brazil recorded 22 percent lower FDI inflows. While the number of greenfield projects remained stable, international project finance plummeted, with 40 percent fewer deals than in 2022. Mexico reported an increase in FDI, as well as a further increase in new greenfield project announcements, consolidating its position among the top global recipients.

 

Redacción Opportimes