São Paulo – For the first time, developing nations received more Foreign Direct Investment (FDI) than developed nations in the period of a year, according to figures disclosed on Wednesday (23) evening by the United Nations Conference on Trade and Development (Unctad) . In total, the total FDI flow was US$ 1.3 trillion in 2012, an 18% reduction as against 2011.
The volume of funds turned to developing economies reached US$ 680 billion, exceeding the value received by developed nations by 130 billion, according to the Global Investment Trends Monitor bulletin.
“FDI flows to developing economies remained resilient, declining only 3%. Flows to developing Asia lost some momentum, although they remained at historically high levels. Latin America and Africa saw a small increase,” adds the report.
In Latin America, the performance was boosted by South America, due to the economic growth of the region. This influenced investment turned to the domestic markets. In the case of Chile, Peru and Colombia, there was also a turning of funds to mining.
In Brazil, the FDI flow “slowed but remained robust”. The Central Bank also disclosed on Wednesday that the inflow of investment for the productive sector totalled US$ 65.3 billion in 2012, the second highest value yet recorded, losing only to the US$ 66.6 billion of 2011. To the Unctad, this confirms the country’s position as a leader in the receipt of investment in the region, answering to 28% of the total.
To the Middle East, the flow of funds dropped for the fourth year running, according to the UN agency, and hit US$ 47 billion. The reasons for this drop are the continued political uncertainty in the region and the bad global economic perspectives. The study points out, however, that investment in Saudi Arabia, the main destination in the region, grew 15.1% to US$ 18.8 billion.
To Africa, the FDI Flow rose 5.5%, to US$ 45.8 billion. According to the Unctad, the northern region of the continent reverted a downwards tendency, with special attention to Egypt, which received US$ 3.5 billion, after having lost US$ 500 million in funds in 2011. This was the result of a return of European investment, despite the crisis in the Euro Zone.
Frustration
Globally, the total US$ 1.3 trillion flow was below the forecast made by the Unctad in July 2012, when the organisation expected US$ 1.6 trillion. Throughout the second half, however, the organisation had already warned that the estimate would not be reached.
The reduced global flow as against 2011 interrupted a recovery started in 2010 and shows, in the evaluation of the UN agency, that the return should take longer than forecasted. The FDI turnover reached its peak in 2007, at US$ 2 trillion, but dropped in the two following years due to the international economic crisis, reaching US$ 1.21 trillion in 2009.
For 2013, the Unctad hopes for “moderate” growth, to US$ 1.4 trillion. In 2014, the forecast is US$ 1.6 trillion, the same volume as in 2011. The organisation believes that the world will “make a hesitant and uneven recovery” over the two years.
*Translated by Mark Ament
