This year marks the 30th anniversary edition of the annual World Investment Report – WIR2020. UNCTAD has recently launched its latest report - International Production Beyond the Pandemic.
It comprises of an in-depth review of the impact caused by COVID-19 on numerous trends and policies. In addition, the report looks into a futuristic perspective by examining steering trends for international production over the decade to 2030.
Statistics decipher the COVID-19 catastrophe will spark a fall in Global FDI flows. In 2020, Global FDI flows are estimated to reduce by up to 40 per cent from their 2019 value of $1.54 trillion. FDI is expected to fall below $1 trillion for the first time since 2005. In 2021, FDI is predicted to reduce by a further 5 to 10 per cent. However the year 2022, is bound to see evident recovery in FDI.
Predictions show developing economies to witness the biggest fall in FDI as they are dependent on investment in global value chain which have been hit. Consequently, developed countries too are affected by the fall in FDI. Amongst developed countries, FDI flows to Europe are expected to fall by 30 to 45 per cent more than those to North America and other developed economies with falls of 20 to 35 per cent. FDI flows to Africa are projected to fall by 25 to 40 per cent in 2020. The developing Asia will be massively hit due to their susceptibility to supply chain disruptions, the weight of GVC-intensive FDI in the region and global pressures to expand production locations. FDI is projected to fall by 30 to 45 per cent. FDI in Latin America and the Caribbean is likely to halve in 2020.
The effectiveness of policy interventions play an integral part in emerging prospects amid the crisis. Trade tensions continue to rise along with financial risks that add to the uncertainty. Supply, demand and policy shock waves have been sent across the globe for FDI. With the predicted recovery in 2022, investment flows will be supported by restructuring and resilience.
Get a glimpse into the thorough report here.