Global foreign direct investment (FDI) maintained momentum in May, adding weight to predictions that it will recover some of the ground lost in 2021, as investors’ plans reflect trends accelerated by the pandemic. 

The fDi Index, which tracks foreign investors’ sentiment, stood at 793 points in May representing a 55% increase from a year earlier, according to the latest figures from fDi Markets. This was down slightly on the record annual increase seen in April. 

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Unctad has projected that FDI will rise by 10–15% in 2021 from the historic rut of 2020. This, however, depends on the pace of economic recovery and the possibility of pandemic relapse.

Announced greenfield FDI projects reached 970 in May, up from 853 a month earlier, but are still lower than the 14-month high recorded in March. While project numbers were still below pre-pandemic levels, they were more than 30% higher than the same month of 2020, when FDI made a timid recovery as lockdowns eased.

Tech and services surge

Several sectors saw increased activity in May, particularly in tech and business services, which posted the largest gains and typically account for the largest share of global FDI projects.

Indian digital giant Infosys announced it would create 1000 roles in the UK focused on cloud computing, data analytics and other enterprise-related technologies, aiming to fill them by 2024 as companies continue to adjust to trends embedded by the pandemic.

“While the talent gap has been looming, the events of the past year have exacerbated the need for vital digital skills as businesses have rapidly accelerated their digital transformation,” Salil Parekh, chief executive of Infosys, said in a statement.

Digital infrastructure investments saw an uptick in May too, with Google setting up cloud-based regional data centres in Canada and Israel, as well as cloud delivery centres in Argentina and Mexico.

Despite a recovery in project numbers across numerous sectors — including consumer products thanks to Amazon’s continued expansion of its logistics network — capital expenditure was down from a year earlier due to several megaprojects announced in May 2020. These included Taiwan Semiconductor Manufacturing’s $12bn foundry in Phoenix, Arizona and Norwegian energy giant Equinor’s Dogger Bank wind farm off the UK’s northeast coast.

Pandemic support

As new coronavirus variants emerge and case numbers rise worldwide, investors are also moving to serve the need for diagnostics, therapeutics and vaccines.

In the US, Australia-based digital diagnostics firm Ellume is set to open a manufacturing site for coronavirus home tests in Frederick, Maryland. 

“Routine testing is essential for monitoring hotspots and emerging variants, and is key to protecting vulnerable communities by empowering individuals with insight into their Covid-19 status.” Sean Parsons, Ellume’s founder and chief executive, said in a statement. “This new facility will help to ensure our Covid-19 home tests are mobilised quickly, at scale, and also establishes an ongoing domestic source of diagnostics for potential future outbreaks.” 

Elsewhere, US-based Resilience Biotechnologies expanded its facility in Mississauga, Canada, to increase its output of vaccines and therapeutics, and Germany’s BioNTech announced plans to establish an mRNA-based vaccine and therapeutics facility in Singapore by 2023.

Green energy boom

The energy transition continued to play out across the globe, with more than $8bn pledged to new renewables projects.

Italian green energy giant Enel announced plans to construct five new renewables projects in the US, amounting to 1.5GW of new generation capacity and 319MW of storage. Elsewhere, France-based Total’s renewable energy subsidiary Neoen is developing a 157MW wind farm near Ravenshoe, Australia.

Apart from Africa, all world regions saw more FDI projects announced in May than a year earlier, with Western Europe posting the largest gain of more than 50 projects.

Spain posted the largest increase in FDI projects between May 2020 and 2021 of any country, and included Portuguese electric utility company EDP’s plans to invest more than €1bn into renewable energy projects in the Galicia region by 2030.

Investor signals — an early indication that a company will be considering a future investment project and major component of the fDi Index — stood at 380 in May, down from the record 449 tracked a month earlier.