UNCTAD predicts bright prospects for global FDI recovery

The United Nations Conference on Trade and Development (UNCTAD) on Thursday predicted bright prospects for global foreign direct investment (FDI) recovery, saying global inflows would pick up to over 1.2 trillion U.S. dollars in 2010.

Global FDI flows bottomed out in the latter half of 2009 and then achieved a modest recovery in the first half of this year, sparking cautious optimism on FDI prospects, the agency said in its annual study of worldwide investment trends.

"In the longer term, the recovery in FDI flows is set to gather momentum," it said, predicting that FDI inflows would rise further to 1.3-1.5 trillion dollars in 2011, and head toward 1.6-2 trillion dollars in 2012.

According to the World Investment Report 2010, FDI inflows worldwide plummeted by 37 percent to 1.114 trillion dollars in 2009, following a 16-percent decline in 2008. After this freefall, a timid and uneven recovery appears on its way, thanks to better corporate profits and improved economic and financial conditions.

The relative weight of developing and transition economies as both destinations and sources of global FDI is expected to keep increasing, the report said.

Although FDI to developing and transition economies declined by 27 percent in 2009 and FDI outflows from these two groups of economies contracted by 21 percent, they absorbed almost half of FDI inflows in 2009 and accounted for one quarter of global FDI outflows.

These countries are leading the FDI recovery and will remain major destinations for foreign investment, said the report.

The report showed that the United States remained the largest recipient of FDI in 2009 (130 billion dollars), while China ranked second with 95 billion dollars.

Half of the six top destinations for foreign investment (the United States, China, France, Hong Kong of China, Britain and Russia) are now developing or transition economies, which also are gaining ground as important sources of global FDI flows.

Source:Xinhua