Global Investment Trend Monitor report
What to study?
For Prelims: Key findings.
For Mains: Improvements, challenges and ways to address them.
Context: The Global Investment Trend Monitor report, compiled by United Nations Conference on Trade and Development (UNCTAD), has been released.
- India was among the top 10 recipients of Foreign Direct Investment in 2019, attracting $49 billion in inflows, a 16 per cent increase from the previous year.
- The global foreign direct investment remained flat in 2019 at $1.39 trillion, a one per cent decline from a revised $1.41 trillion in 2018.
- Reasons: This is against the backdrop of weaker macroeconomic performance and policy uncertainty for investors, including trade tensions.
- Developing economies continue to absorb more than half of global FDI flows.
- South Asia recorded a 10 per cent increase in FDI to $60 billion and this growth was driven by India, with a 16 per cent increase in inflows to an estimated $49 billion.
- The FDI flows to developed countries remained at a historically low level, decreasing by a further six per cent to an estimated $643 billion.
- There was zero-growth of flows to United States, which received $251 billion FDI in 2019, as compared to $254 billion in 2018, the report said.
- Despite this, the United States remained the largest recipient of FDI, followed by China with flows of $140 billion and Singapore with $110 billion.
- The FDI in the UK was down six per cent as Brexit unfolded.
- GDP growth, gross fixed capital formation and trade are projected to rise, both at the global level and, especially, in several large emerging markets.
- Such an improvement in macroeconomic conditions could prompt MNEs to resume investments in productive assets, given also their easy access to cheap money, the fact that corporate profits are expected to remain solid in 2020, and hopes for waning trade tensions between the United States and China.
- However, significant risks persist, including high debt accumulation among emerging and developing economies, geopolitical risks and concerns about a further shift towards protectionist policies.
Sources: the Hindu.