FDI into emerging markets beats developed markets

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FDIForeign direct investment (FDI) inflows into emerging market economies exceeded inflows into developed market economies for the first time last year, according to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2013.

Emerging market economies accounted for 52 per cent of global FDI in 2012, up from 44.5 per cent in 2011.  Developed economies accounted for 41.5 per cent of global FDI in 2012, down from 49.7 per cent in 2011.

The investment shift to emerging markets can be attributed to slowing growth in developed countries, as investors sought after fast-growth to escape Japan and Europe, whom suffered through recessions. In addition, concerns also weighed on investors that the US Federal Reserve would slow monetary stimulus at some point in 2013 thus further straining the pace of growth in developed countries.

In 2012 global FDI dropped 18 per cent to $1.35 trillion, from $1.65 trillion in 2011, as macroeconomic fragility and policy uncertainty weighed on investment.

Investment in developed economies tumbled drastically by 32 per cent to $561 billion in 2012, the lowest level in nearly a decade, and down from $820 billion in 2011. In comparison, investment into emerging economies slid a mere 4 per cent to $703 billion in 2012, the second highest level recorded, down from $735 billion in 2011, according to the report.

“Uncertainty created by the continuing Euro crisis, the prospect of political transition in a number of major countries, and a slowdown in the commodities boom were among key factors contributing to subdued FDI in 2012,” for developed countries, UNCTAD said in the report.

In a regional breakdown of global FDI, the Asian region topped the list accounting for $407 billion or 30.1 per cent of the global share, followed by Latin America and the Caribbean at $244 billion or 18.1 per cent of the global share, the report stated.

FDI inflows into Asia did decline 6.7 per cent from $436 billion in 2011 to $407 billion in 2012, however this was the second highest level recorded and accounted for 58 per cent of total FDI flow into emerging economies, according to the report.

UNCTAD forecasts FDI flows in 2013 to remain close to the level seen in 2012, with an upper range of $1.45 trillion.  The report states that FDI flows may reach $1.6 trillion in 2014 and $1.8 trillion in 2015.

“Recovery to more vigorous investment levels will take longer than expected, mostly because of global economy fragility and political uncertainty,” UNCTAD said.

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Reading Time: 2 minutes

Foreign direct investment (FDI) inflows into emerging market economies exceeded inflows into developed market economies for the first time last year, according to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2013.

Reading Time: 2 minutes

FDIForeign direct investment (FDI) inflows into emerging market economies exceeded inflows into developed market economies for the first time last year, according to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report 2013.

Emerging market economies accounted for 52 per cent of global FDI in 2012, up from 44.5 per cent in 2011.  Developed economies accounted for 41.5 per cent of global FDI in 2012, down from 49.7 per cent in 2011.

The investment shift to emerging markets can be attributed to slowing growth in developed countries, as investors sought after fast-growth to escape Japan and Europe, whom suffered through recessions. In addition, concerns also weighed on investors that the US Federal Reserve would slow monetary stimulus at some point in 2013 thus further straining the pace of growth in developed countries.

In 2012 global FDI dropped 18 per cent to $1.35 trillion, from $1.65 trillion in 2011, as macroeconomic fragility and policy uncertainty weighed on investment.

Investment in developed economies tumbled drastically by 32 per cent to $561 billion in 2012, the lowest level in nearly a decade, and down from $820 billion in 2011. In comparison, investment into emerging economies slid a mere 4 per cent to $703 billion in 2012, the second highest level recorded, down from $735 billion in 2011, according to the report.

“Uncertainty created by the continuing Euro crisis, the prospect of political transition in a number of major countries, and a slowdown in the commodities boom were among key factors contributing to subdued FDI in 2012,” for developed countries, UNCTAD said in the report.

In a regional breakdown of global FDI, the Asian region topped the list accounting for $407 billion or 30.1 per cent of the global share, followed by Latin America and the Caribbean at $244 billion or 18.1 per cent of the global share, the report stated.

FDI inflows into Asia did decline 6.7 per cent from $436 billion in 2011 to $407 billion in 2012, however this was the second highest level recorded and accounted for 58 per cent of total FDI flow into emerging economies, according to the report.

UNCTAD forecasts FDI flows in 2013 to remain close to the level seen in 2012, with an upper range of $1.45 trillion.  The report states that FDI flows may reach $1.6 trillion in 2014 and $1.8 trillion in 2015.

“Recovery to more vigorous investment levels will take longer than expected, mostly because of global economy fragility and political uncertainty,” UNCTAD said.

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