São Paulo – The global flow of foreign direct investments (FDI) leaped up 36% in 2015, in comparison to 2014, and reached USD 1.7 trillion, according to the report Global Investment Trends Monitor, published this Wednesday (20th) by the United Nations Conference on Trade and Development (Unctad). According to the agency, it’s the highest value since the 2008 and 2009 international financial crisis. The highest flow ever registered was in 2007, when the world managed around USD 2 trillion in FDI. <\/p>\n
Unctad warns, however, that the growth in 2015 was largely due to cross-border mergers and acquisitions, with greenfield investments projects lending only a “limited contribution”. This means that the volume of capital, although high, had, in effect, a lack of productive impact.<\/p>\n
The agency adds that the part of the flow was related to corporate reconfigurations “involving large values in the financial account of the balance of payments, but little movement in actual resources”.<\/p>\n
The inflow of investments in developed countries, which surged 90% from 2014 to 2015, was the highlight. Therefore, the wealthiest nations again attracted the majority of resources, 55% of the total. Unctad highlights the strong flows to the European Union and the United States.<\/p>\n
The US was again the country to receive the most FDI, after dropping to third position in 2014, when the volume of resources received broke a negative record. Hong Kong and China were in the second and third place in 2015, respectively.<\/p>\n
Investments in developing countries also increased last year, however, at a slower pace with 5%. This growth was secured by developing nations in Asia, since other regions saw the inflow of resources drop, which were the case in Latin America and Africa.<\/p>\n
The decline of 11% seen in Latin America was impacted in part by Brazil’s performance, the largest destination of investments in the region, which saw its inflow drop 23% to USD 56 billion. The country ended up in the eighth position in the global ranking. The cooling of domestic consumption and the drop in the price of commodities reduced the interest of investors in the region.<\/p>\n
In the specific case of Brazil, according to Unctad, the flow was impacted by the sale of the communications company GVT by Vivendi (France) to Vivo, the Brazilian subsidiary of Spanish company Telefônica, which meant a “divestment” of a foreign company in the country.<\/p>\n
Arabs<\/strong><\/p>\n In West Asia, which includes the Arab countries in the Middle East, the FDI flow increased 5% and reached USD 45 billion in 2015, after six consecutive years of decline. The increase, however, was largely due to Turkey, which is not an Arab country. <\/p>\n In North Africa, the flow also increased, although in the continent as a whole it declined. Egypt was responsible for the positive result after receiving USD 6.7 billion in FDI last year, against USD 4.3 billion in 2014.<\/p>\n For 2016, Unctad believes that there will be a decline in the global volume of FDI again, “reflecting the fragility of the global economy, volatility of global financial markets, weak aggregate demand and a significant deceleration in some large emerging markets economies”. The situation could become worse due to “geopolitical risks” and “regional tensions”.<\/p>\n “Stagnant greenfield investment globally and outright declines in a number of developing regions suggests that the current upswing in global FDI flows is potentially fragile and exposed to the vagaries of the cross border M&A market”, says Unctad’s report. <\/p>\n On the other hand, the agency says that improvement of the global economy – global growth is projected to reach 2.9% in 2016 compared to 2.4% in 2015 – due to modest recovery in developed economies, could induce companies to make productive investments to cement their business plans. Further depreciation of currencies in emerging markets, such as Brazil, and the need for asset sales by companies in debt also could stimulate the increase in flows for this year.<\/p>\n *Translated by Sérgio Kakitani<\/strong><\/p>\n