UN body says global foreign direct investment inflows remain stagnant in 2010

Global foreign direct investment (FDI) inflows remained stagnant in 2010 at an estimated 1,122 billion U.S. dollars, comparing to 1,114 billion dollars in the previous year, representing a 0.7 percent growth, announced United Nations Conference on Trade and Development (UNCTAD) here on Monday.

"We have seen the global economic recovery, we have seen that trade and industrial output fully recovered to pre-crisis level," however, "FDI remains stagnated, and still at its lowest level," said Zhan Xiaoning, Director of UNCTAD Investment and Enterprise Division, referring to the fact that global FDI in 2010 was 25 percent below the pre-crisis average between 2005 to 2007.

The results came out of an UNCTAD annual survey titled "Global and Regional FDI Trends in 2010", which had registered divergent performances between developed economies and developing economies.

Mired in financial crisis, FDI in developed economies has not yet moved out of the declining trend. UNCTAD estimation indicates FDI in this group of economies to have fallen by 7 percent in the past year, down to 526.6 billion dollars.

The European Union has suffered a drastic FDI decrease by 19.9 percent, from 361.9 billion dollars in 2009 to 289.8 billion dollars in 2010, way below the 2007 hike at 923.8 billion dollars.

 
Another major developed economy, the United States, has seen a 43.3 percent increase, up from 129.9 billion dollars registered in 2009 to 186.1 billion dollars last year. Yet the increase, according to Zhan, might merely reflect a recovery from the dip. The U.S. registered a 266-billion-dollar FDI in 2007, and the inflows topped 324.6 billion dollars in 2008.

On the other hand, FDI to developing economies and economies in transition, for the first time in history, exceeded the investment flows to developed economies, taking up 53 percent of the total global FDI in 2010.

FDI inflows to developing economies rose some 10 percent in 2010, which the survey attributed to "a relatively fast economic recovery and increasing South-South flows." Nonetheless, the survey marked "significant differences" among the developing economies, with Latin America and South, East and South-east Asia leading the strong growth in FDI inflows, while West Asia and Africa continued to see declines. Inflows to South, East and South-east Asia has picked up remarkably in 2010, rose by 18 percent, reclaiming the downfall from a 17 percent decline made in 2009.

And the increase is largely led by FDI inflows to economies such as Singapore, Hong Kong SAR, China, Indonesia, Malaysia and Vietnam. China registered a recording breaking 101 billion dollars FDI inflows in 2010, representing a 6.3 percent growth from the previous year.

China has seen steadily increased FDI inflows in the past few year, commented Zhan, noting that a drastic increase is unlikely to happen because of the large base the country is standing on.

"The structural of FDI (in China) has changed significantly last year", Zhan said, adding that the FDI growth in manufacturing sector has given way to that of services sector, which reflects a "rebalancing" of economic structure towards consumption-related areas. UNCTAD expects worldwide FDI to reach between 1.3 trillion dollars to 1.5 trillion dollars in 2011, on improved macroeconomic conditions, strengthened corporate profits by transnational corporations, and boosted stock market valuations.
(Source:xinhua)