Global foreign direct investment (FDI) flows in the first half of 2021 reached an estimated $852 billion, showing stronger than expected rebound momentum, according to UNCTAD’s Investment Trends Monitor released on today.
The increase in the first two quarters recovered more than 70% of the loss induced by the COVID-19 pandemic in 2020.
“The rapid FDI recovery and the optimistic outlook mask the growing divergence in FDI flows between developed and developing economies, as well as the lag in a broad-based recovery of the greenfield investment in productive capacity. Furthermore, uncertainties remain abundant,” said James Zhan, UNCTAD’s director of investment and enterprise.
Developed economies record biggest rise
Developed economies saw the biggest rise, with FDI reaching an estimated $424 billion in the first half of 2021 – more than three times the exceptionally low level in 2020.
In Europe, although the bulk of growth was due to reversals in countries with significant conduit movements, several large economies saw sizeable increases, on average remaining only 5% below pre-pandemic quarterly levels.
Inflows in the United States were up by 90%, driven entirely by a surge in cross-border mergers and acquisitions.
FDI flows in developing economies also increased significantly, totalling $427 billion in the first half of 2021, with a growth acceleration in East and South-East Asia (+25%), a recovery to near pre-pandemic levels in Central and South America, and upticks in several other economies across Africa and West and Central Asia.
Of the total “recovery increase” in global FDI flows in the first half of 2021 of $373 billion, 75% was recorded in developed economies.
High-income countries more than doubled quarterly FDI inflows from rock bottom 2020 levels, middle-income economies saw a 30% increase, and low-income economies a further 9% decline.