Global FDI fell by 41% in the first half of 2018, to an estimated $470bn, from $794bn in the same period in 2017, according to the latest Global Investment Trends Monitor from the United Nations Conference on Trade and Development (Unctad).
The main cause behind the drop was large repatriations by US parent companies of accumulated foreign earnings from their affiliates abroad, following tax reforms by the Trump administration, said Unctad.
The drop was more significant in developed countries, where FDI inflows fell by 69% to an estimated $135bn, the report said. FDI also declined slightly across all developing regions, to an estimated $310bn in the first half of the year, 4% lower than in the first half of 2017.
Developing economies’ share of global FDI reached a record 66%, with developing Asia still the largest host region. It received 47% of global FDI in the first half of 2018. Globally, China had the most FDI.
By contrast, cross-border merger and acquisitions remained flat in the first half of 2018 at $371bn. Meanwhile, announced greenfield projects – an indicator of future trends – recovered to $45bn, an increase of 42% from relatively low levels in the same period in 2017, according to Unctad. This is corroborated by data from fDi Markets, which shows that global FDI in the first half of 2018 increased by 32%, year on year.
The greenfield investment recovery largely bypassed developed countries, where the increase was less than 5%, the report said. “The FDI trends for the first half of 2018 risk bringing global investment down to its lowest level for more than a decade, driven more by policy factors than by the economic cycle,” said the report.
Policymakers from around the world will discuss global policy for sustainable investment at the World Investment Forum on October 22-26, at the Palais des Nations in Geneva.