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October 20,2021
Andrew Campbell
According to the latest Investment Trends Monitor released on October 18 by the United Nations Conference on Trade and Development (UNCTAD), after a significant drop in 2020 due to the COVID-19 pandemic, global foreign direct investment (FDI) reached an estimated US$852 billion in the first half of 2021, indicating a stronger than expected rebound momentum.
On Investment Trends Monitor, Mr. James X. Zhan, Director of UNCTAD's Investment and Enterprise Division, published a 6-page report on the World Investment Forum 2021. The increase in the first two quarters more than compensated for more than 70% of the loss caused by the COVID-19 pandemic in the first half of 2021, more than three times the exceptionally low level in 2020.
According to the most recent Investment Trends Monitor, developed economies accounted for 75% of the total recovery increase in global FDI flows in the first half of 2021. The developed economies saw the greatest increase, with FDI estimated to reach $424 billion in the first half of 2021. High-income economies increased by 30%, while low-income economies decreased by 9%.
According to UNCTAD, investor confidence in industry and value chains is still low. In developing countries, the recovery in areas relevant to the Sustainable Development Goals (SDGs) remains fragile. Greenfield investment project announcements continued to fall, falling 13% in number and 11% in value until the end of September. The total value of announced greenfield investments and project finance deals increased by 60%, owing primarily to a small number of very large deals in the power sector. International project finance in renewable energy and utilities remains the fastest growing industry.
Despite the fact that uncertainties persist, the global FDI outlook for the full year has improved from previous estimates. The length of the health crisis, the rate of vaccination, particularly in developing countries, and the speed with which infrastructure investment stimulus is implemented are all significant sources of uncertainty. Other major risk factors, such as labor and supply chain bottlenecks, energy prices, and inflationary pressures, will have an impact on year-end results.