São Paulo – Global foreign direct investment (FDI) reached US$ 720.7 billion in the first half, 2% more than it the second half of last year, according to the Global Investment Trends Monitor report issued this Tuesday (18) by the United Nations Conference on Trade and Development (Unctad).
According to the organization, the 2% half-on-half growth is a continuation of the moderate pick-up of investment seen in 2010. The Unctad underscores, however, that growth prospects were lowered halfway through this year due to the debt crisis in Europe, the stagnant US economy and the ensuing decline in investor confidence.
In the first half, as well as in 2010, investment in developing countries and transitional economies (former Soviet bloc) surpassed the total invested in developing nations. Latin America and the Caribbean, for example, received US$ 94.2 billion, 5.1% more than in the second half of last year.
Brazil was the country that attracted the most funds in the region, at US$ 32 billion, over one third of the regional total, according to the Unctad. According to the Brazilian Central Bank, foreign direct investment into the country reached US$ 44 billion from January to August. According to the Focus survey, issued by the Central Bank this Monday (17), market operators expect investment to reach US$ 60 billion this year, an all-time high.
“In the region as a whole, there has been a significant decline in the value of international mergers and acquisitions, after a year of outstanding growth, but investment in new enterprises has taken FDI to a higher level,” the publication asserts. Latin America countered the global tendency, by which mergers and acquisitions grew and new investment dropped.
The flow of investment into Africa stood at US$ 30.2 billion, 4.5% more than in the second half of 2010. According to the Unctad, the growth was moderate and mostly due to a resumption of investment into South Africa, which had dropped sharply last year.
“However, the continuing political uncertainty in Egypt and Libya caused a significant decrease in FDI flows into North Africa, which will inevitably hold back the overall performance of the continent,” claims the Monitor.
Along the same lines, the report informs that investment into Western Asia, or the Middle East, dropped by 32.9% when compared with the last six months of last year. The total amount, US$ 20.8 billion, is slightly higher than in the first half of 2010, when investment totalled US$ 20.6 billion.
“FDI into Western Asia had barely recovered from the international financial crisis, in the second half of 2010, when it suffered the blow of protests in the Arab world in the first half of 2011, which pushed down investment flows to a level near that of the same period of last year,” the document states. According to the Unctad, this took place in spite of increased investment in Turkey, which attracted a third of the total invested in the region.
The remainder of Asia, however, was the region in which FDI grew the most during the last quarter. Investment grew by 19.5% to reach US$ 184.2 billion. The performance was driven by China and India, but there was also growth in other important economies such as Indonesia, Malaysia, and Singapore.
Developed countries attracted 3.9% less FDI in the first half this year than in the first six months of 2010. Despite the recent turmoil, Europe attracted 15.2% more funds, at a total of US$ 227.3 billion.
The entire Unctad review takes on a cautious note. The forecast for the year as a whole “remains cautiously optimistically,” and the rate of growth is expected to slow down in the second half. The organization estimates that global FDI flow in 2011 should be at levels similar to those that preceded the 2008 financial crisis. The figure should remain approximately 25% lower than the all-time high recorded in 2007.
*Translated by Gabriel Pomerancblum
