São Paulo – Global foreign direct investment (FDI) flows could fall 10% to 15% this year in comparison to 2015, according to the Global Investment Trends Monitor bulletin released this Thursday (6) by the United Nations Conference on Trade and Development (UNCTAD). The amount should be between USD 1.5 trillion and USD 1.59 trillion, well below the record USD 2 trillion seen in 2007 before the international financial crisis. <\/p>\n
According to the UNCTAD, the estimate reflects the fragility of the global economy, with a persistent low international demand, weak growth in commodity-exporting countries, a profit decline for multinational companies, among other reasons. The UN agency adds that geopolitical risks and regional tensions could make this scenario even worse. <\/p>\n
The organization expects a reduction of FDI flows in both developed and developing countries, but with variations between regions and blocs. In the case of Africa, for instance, there’s a possibility of 6% growth, reaching between USD 55 billion and USD 60 billion. <\/p>\n
In the continent, the countries that should grow the most in terms of investment attraction are in North Africa, especially Morocco and Egypt. The auto industry has a significant weight in the increase of the investment flow, with projects in Morocco being announced by PSA Peugeot-Citröen, Renault and Ford, and in Egypt by Nissan. This interest comes from industrial policies adopted by African countries.<\/p>\n
The liberalization of investments and privatization of commodity exploration should also help increase investment flows. UNCTAD mentions the case of Algeria, with state-owned Sonatrach intending to sell its stakes in 20 oil and gas fields in the country.<\/p>\n
In Latin America, however, a reduction of around 10% in FDI flows is expected in 2016, bringing the number down to between USD 140 billion and USD 160 billion, due to the economic slowdown in the region. In Brazil, however, weak economic performance increased purchases of Brazilian companies by foreign ones, due to the difficulties faced by these companies or to low asset prices. Net sales of Brazilian companies to foreign counterparts in the first quarter in 2016 increased by 80%.<\/p>\n
Among the BRICS (Brazil, Russia, India, China and South Africa), however, FDI flows are expected to go up 10% to between USD 270 billion and USD 290 billion. This growth will be driven by China, India and Russia. Brazil and South Africa are expected to register a decline. <\/p>\n
Even so, Brazil continues to be one of the favorite destinations for FDI. The country ranks as the seventh most attractive in a poll of executives from multinationals conducted by UNCTAD. Previously, however, the country had ranked fourth. Before Brazil are the United States, China, India, United Kingdom, Germany and Japan. <\/p>\n
UNCTAD believes there will be a recovery in FDI flows starting next year and global volume should surpass USD 1.8 billion in 2018, still below pre-financial crisis figures.<\/p>\n
In the poll of multinationals, only 40% of the executives said they expect an increase in investments from 2016 to 2018. <\/p>\n
UNCTAD also conducted a survey with governments’ investment promotion agencies to know which countries will be the main sources of investments from 2016 to 2018. Brazil doesn’t appear among the first fifteen countries, but the United Arab Emirates ranks 14th. <\/p>\n
*Translated by Sérgio Kakitani<\/strong><\/p>\n