According to a report from the Organisation for Economic Co-operation and Development and the World Trade Organization, the 20 richest nations saw headline FDI inflow figures (which include mergers and acquisitions, unlike fDi Markets data) decline by 45% last year compared to 2008, despite a pick-up in the second and third quarters of 2009.
The financial turmoil seems to have affected G-20 countries more than the other markets. The developing economies saw inflows fall by 39% between 2008 and 2009.
The report points out that policies have to be respected in order to maximise the potential of foreign investments to achieve a sustainable global recovery. Thus, G-20 countries adopted some measures that are less favourable to foreign investments, such as introducing new maximum limits and new approval procedures for foreign equity participation in small and medium-sized enterprises, and tightening the foreign investment regime for sectors sensitive to national security. Some emerging markets also took measures of expropriation and nationalisation.
However, the report concludes that a modest recovery should happen in 2010. Companies should revise their international investment plans upward for 2010 onwards, which in turn would give rise to growing FDI flows.