São Paulo – The United Nations Conference on Trade and Development (Unctad) believes transnational corporations (TNCs) will display an increased appetite for investments beginning this year. According to the Global Investment Trends Monitor report, issued this Monday (18th) by the organization, the improvement of macroeconomic conditions, particularly in the United States, the Eurozone’s proactive monetary policy and growing liberalization and incentives to foreign direct investments (FDI) will encourage these corporations to invest.
“In addition to record levels of cash holdings by TNCs, the prospects for developed countries have been upgraded with average economic growth rates projected to accelerate from 1.6% in 2014 to 2.2% in 2015,” the report reads.
The rebound in developed economies should have a significant impact on world FDI flows, considering that since the 2008 international financial crisis, developing countries have taken center stage in this regard.
Last year, for instance, multinationals from emerging countries accounted for nearly half a trillion US dollars in FDI, or 36% of global flows; before the crisis, in 2007, their combined share was only 12%.
Moreover, the developing countries in Asia – Japan not included – became the leading investing region in 2014 at US$ 440 billion, a higher sum than North America and Europe.
Of the 20 leading FDI issuing countries last year, nine were developing countries and the transition economies (from the former URSS). Apart from the Asian nations, this group comprised Russia, Chile and Kuwait. The latter was leading foreign investor among Middle East countries, at US$ 12.7 billion invested.
“In 2014, investors from the South continued their expansion abroad. The slowing down of their economies may have boosted the desire of their TNCs to diversify abroad,” the report continues.
In Brazil, however, the same logic did not hold sway. According to Unctad, Brazilian multinationals continued to receive repayments of loans or borrow loans from their foreign affiliates, “resulting in negative FDI outflows for the fourth consecutive year.”
Although investment flows from developed countries largely remained flat in 2014, Unctad believes said flows should rise again.
Some activities, however, are amenable to the negative impact of geopolitical instability and low commodity prices. Unctad claims, however, that this impact will be limited to specific areas and industries, such as oil and gas and commodities in general.
*Translated by Gabriel Pomerancblum
