It is presumptuous at the best of times to try to predict the future but in the current uncertain climate – in which it feels we are all walking into 2009 wearing blindfolds – it is surely a fool’s game. Yet in a time of great uncertainty, all we can do is speculate. There is extreme speculation about what the future holds for global capital flows in the face of a potentially severe global economic downturn, with the general consensus one of enormous pessimism.

The knock-on effects of the global financial crisis are beginning to touch the corporate sector. On this page in February 2008, fDi posited that the corporate sector sits only midway down in a metaphorical line of dominoes with regards to the US subprime troubles and ensuing credit crunch. At the time, we said that the corporate domino would stay upright for a while longer, due to high savings ratios and well-stacked balance sheets. We predicted that FDI flows, after a record year in 2007, would remain buoyant for at least the first half of 2008 – they did indeed and they are holding steady.

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Ten months on, the corporate domino is still standing, although it is wobbling.

A handful of high-profile technology companies – typically among the most active foreign investors – are slashing earnings forecasts and preparing for job losses. If this continues, the implications for greenfield investment levels could be ugly; ICT as a sector is the biggest driver of FDI. Financial services – speaking of ugly – is another key driver.

There seems very little chance that 2009 will be pain-free, for corporate investors as well as the local, national and regional economies that rely upon them for jobs and capital.

But so far, the big picture for global capital flows is not as gruesome as it might seem at first glance. Opportunities are shrinking in many areas, but are also shifting to new ones. Privatisation is declining as a driver of crossborder investment, while public-private partnerships are on the rise, mainly in infrastructure. Ageing infrastructure, even in developed countries such as the US, presents business and investment opportunities for the private sector; financing these deals is a promising bright spot for banks. Environmental technology, the fastest growing FDI sector, is still red-hot, with $60bn in investment recorded by fDi Intelligence in the first seven months of this year alone, more than in the whole of 2007.

At the end of the first quarter of this year, BP chairman Peter Sutherland seconded what other corporate leaders were telling fDi. He said that despite the credit crunch, “crossborder investment will continue and capital will be found for FDI where necessary”. Much has happened since quarter one – very little of it good – but we are still inclined to agree.

Courtney Fingar