São Paulo – The global flow of foreign direct investments (FDI) could grow 5% this year to USD 1.8 trillion in comparison to 2016, after a decline of 2% last year over 2015, when it reached USD 1.75 trillion, according to the World Investment Report 2017, made available this Wednesday (7) by the United Nations Conference on Trade and Development (UNCTAD).
The agency predicts that the flow will continue to grow in 2018 to USD 1.85 trillion, but points out that the amount’s still below the record-breaking number of 2007, when it reached USD 1.9 trillion.
According to UNCTAD, the United States, China and India will be the top destinations for FDI in the near future. In general, companies trust Asia’s developing countries. Regarding the other regions, the agency believes growth outlooks look moderate, with the exceptin of Latin America and the Caribbean, regions where the forecast doesn’t predict any growth on the investments flow.
The UN agency’s secretary-general, Mukjisha Kituyi, said in a statement that the they are “caustiously optimistic” regarding the recovery of investments growth, but pointed out that the increase in geopolitical risks and uncertainties on certain policies taken by governments could negatively impact the pace of recovery.
Last year, the United States were the top destination for FDI once again, followed by the United Kingdom and China. Brazil took the seventh position, one step above than in 2015, despite the fact that the flow of investments to the country felll from USD 64 billion in 2015 to USD 59 billion in 2016.
The decline in the global flow last year was due to a weak economic growth and a significant risk perception by multinational companies. This impacted mainly the influx of resources to developing nations, which dropped 14% in comparison to 2015 to USD 646 billion.
On the other hand, investments coming from developed countries also declined 11% to USD 1 trillion, mainly from multinational European companies. In this scenario, the US again was the main source of investments, but China took second place for the first time.
UNCTAD also highlighted that for the first time the investment flow to the G20, the group of the world’s 20 largest economies, surpassed USD 1 trillion.
Regions
In Latin America and the Caribbean, the inflow of foreign investments declined for the fifth consecutive year. There was a decline of 14% in 2016 over 2015 to USD 142 billion. Brazil, the top destination in the region, registered a drop of 9% in the same comparison. The decline occurred especially in the services sector.
For 2017, the forecasts for Latin America are not positive. According to UNCTAD, the region’s economic growth should remain well below of the averages seen in the past, when the FDI flow was strongly growing. Investments should stay down especially in the mining sector.
In North Africa, the FDI flow increased 11%, to USD 14.5 billion, in 2016 over 2015. The performance was driven especially by Egypt, which attracted USD 8.1 billion, an increase of 17% in the same comparison. This occurred mainly due to gas discoveries done by foreign companies in the Arab country.
In the Middle East, investments dropped 2% last year in comparison to the previous one, to USD 28 billion, due do oil’s low prices. UNCTAD points out that Saudi Arabia registered a decline of 8%.
*Translated by Sérgio Kakitani
