FDI flows to developed economies almost doubled to 962 billion U.S. dollars
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]G[/dropcap]lobal foreign direct investment (FDI) flows rose to 1.76 trillion U.S. dollars in 2015, hitting their highest level since pre-crisis peak in 2007, according to an annual report published on Tuesday by the UN Conference on Trade and Development (UNCTAD).
“A 38 percent jump in flows gives hope that global FDI is at long last returning to a growth path. But we are not yet out of the woods,” UNCTAD Secretary-General Mukhisa Kituyi cautioned.
According to the latest World Investment Report 2016, a surge in cross-border mergers and acquisitions to 721 billion U.S. dollars, from 432 billion U.S. dollars in 2014, was the principal factor behind the global rebound. Those acquisitions were due to large corporate reconfigurations by multinational enterprises, including shifting their headquarters, for strategic reasons and for tax inversion purposes.
The report noted that inward FDI flows to developed economies almost doubled to 962 billion U.S. dollars. As a result, the share of developed economies in world FDI inflows rose to 55 percent in 2015, reversing a five-year trend during which developing and transition regions had become the main recipients of global FDI.
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]M[/dropcap]eanwhile, developing economies also saw FDI inflows reach a new high of 765 billion U.S. dollars, up 9 percent on 2014, because of the performance of Asia. Developing Asia received record annual inflows, with FDI surpassing half a trillion dollars, and remained the largest FDI recipient region in the world.
” In terms of FDI outflows, Europe became the world’s largest investing region while China held its position as the third largest investor in the world, after the United States and Japan.
UNCTAD forecasts that FDI flows are likely to contract by 10 to 15 percent in 2016, reflecting the fragility of the global economy, the persistent weakness of aggregate demand, sluggish growth in some commodity-exporting countries, effective policy measures to curb tax inversion deals and a slump in multinational enterprises profits in 2015 to the lowest level since the global economic and financial crisis.
It warned that elevated geopolitical risks and regional tensions could further amplify the expected downturn. Over the medium term, FDI flows are projected to resume growth in 2017 and to surpass 1.8 trillion U.S. dollars in 2018.
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