Indian Economy
Global Investment Trend Monitor Report: UNCTAD
- 21 Jan 2020
- 3 min read
Why in News
According to the recently released Global Investment Trend Monitor Report by the United Nations Conference on Trade and Development (UNCTAD), India was among the top 10 recipients of Foreign Direct Investments (FDI) in 2019.
Key Highlights
- Global Trend: The global FDI marked a decline by 1% from revised $1.41 trillion ( in 2018) to $1.39 trillion (in 2019). This was against the backdrop of weaker macroeconomic performance and policy uncertainty for investors in the midst of ongoing trade tensions.
- Developing economies continued to attract more than half of global FDI flows, whereas, the FDI flows to developed countries decreased further by 6%.
- Despite this, the United States remained the largest recipient of FDI, followed by China and Singapore.
- Developing economies continued to attract more than half of global FDI flows, whereas, the FDI flows to developed countries decreased further by 6%.
- Regional & India: South Asia recorded a 10% increase in FDI and this growth was driven by India marking a 16% increase in FDI inflows.
- India attracted $49 billion FDI inflows in 2019 as compared to $42 billion (in 2018). The majority of this went into services industries, including Information Technology.
- Inflows into Bangladesh and Pakistan declined by 6% and 20%, respectively.
- Mergers & Acquisitions: Also, according to the report, cross-border Mergers & Acquisitions (M&As) decreased by 40% in 2019 (the lowest level since 2014). The underlying reasons for this fall were sluggish Eurozone growth and Brexit.
- The fall in global cross-border M&As sales was deepest in the services sector (56% decline), followed by manufacturing (19% decline) and primary sector (14% decline).
- Future Projections: However, UNCTAD expects FDI flows to rise moderately in 2020, as according to current projections, the global economy is set to improve from its weakest performance since the global financial crisis in 2009.
- The GDP growth, gross fixed capital formation and trade are projected to rise, at the global level (especially in many large emerging markets).
- Such an improvement in macroeconomic conditions could prompt Multinational Enterprises (MNEs) to resume investments in productive assets (provided their easy access to cheap money).
- However, significant risks persist, including high debt accumulation among emerging and developing economies, geopolitical risks and concerns about a further shift towards protectionist policies.
