Global foreign direct investment (FDI) collapsed in March as the Covid-19 pandemic forced countries around the world to impose lockdowns and curtail domestic and international movement, undermining cross-border investment and slamming the brakes on growth.

The fDi Index – which tracks foreign investor sentiment – fell to a record low reading of 595 in March, down by 39.7% from the same month in 2019, according to the FT’s foreign investment monitor fDi Markets


Ongoing restrictions on movement and business activity are expected to hit the viability of cross-border investment for a number of months as investment decisions are put on hold in the absence of site visits and face-to-face meetings.

The number of greenfield projects announced worldwide by foreign investors fell to 744 in March, fDi Markets data shows, the lowest monthly level since December 2004. The slump outstrips the worst month of the global financial crisis a decade ago, when announced projects fell to 961 in August 2009. 

“The dramatic fall in the fDi Index score is not unexpected,” said Glenn Barklie, head of benchmarking services at fDi Markets, adding that he expected the April index score to remain weak. “Although some countries such as South Korea and China have begun to reduce lockdown restrictions others such as the UK have seen increased problems so we do not expect FDI flows to bounce back.”

Long-term outlook steady

There are signs, however, that direct investors are willing to look beyond the current turmoil and retain a long-term outlook. 

The number of investment intention signals picked up by fDi Markets – such as rounds of funding to provide capital for future international expansion – has not fallen in March. 

In fact, fDi Markets picked up 248 investment signals in the month, from 243 a year earlier.

Mr Barklie added that while it was a good signal that investor intentions were holding up, he urged caution. “Over the coming months the economic situation will become clearer. It may be that some delayed investments go ahead but others will be cancelled. Companies may also look at cost saving investments and the nearshoring of activities,” he added.

Poland an outlier

In March, Covid-19 spread rapidly in western Europe and the Americas, which is reflected in the FDI data.

Announced FDI projects into western Europe fell by two thirds from a year earlier,  whereas they halved in North America and the Asia-Pacific region, according to fDi Markets data.

Most major recipient countries for FDI saw the number of investment projects halve or worse, with a few exceptions such as Poland.

The eastern European country saw robust investment resilience as the Polish government was able to contain the spread of the virus and therefore the scale of lockdown restrictions. As a result, most foreign investors did not delay announcing major projects. 

With value chains expected to become more regional, developers of logistics infrastructure such as US Hillwood and Panattoni or logistics operators like German Hellman announced new investments in the country in March. 

The renewable energy sector, meanwhile, continued to attract investment; Germany’s Innogy SE kicked off construction on a 47.5MW wind farm in West Pomerania in early March. 

Electric cars and renewables

Elsewhere, Japanese investors in the automotive industry announced key projects in early March. Toyota made public plans to build electric vehicles in the Chinese northeastern port city of Tianjin just a few weeks before the government in Tokyo earmarked $2.2bn in incentives for companies willing to shift production out of China. 

In the UK, Nissan kicked off a £400m investment campaign to upgrade its facility in Sunderland. The move follows the end of the Brexit transition period on January 31, during which Japanese companies repeatedly voiced uncertainties about the future of their British operations. 

In the energy market, Covid-19 has wreaked havoc with traditional industries and accelerated the shift towards green tech.  

Foreign investment into oil and gas and coal, for example, has evaporated with only 37 projects worth $10.9bn announced in the first quarter of 2020, down from 198 projects worth $61.1bn in the first three months of 2019, according to fDi Markets. 

However, foreign investment in renewable energy has bucked the trend with 139 projects worth $22.8bn announced in the first quarter of 2020, from 137 projects worth $19.9bn a year earlier.