The Strategist

Global FDI volume surges in 2021

01/20/2022 - 08:51

According to a report released by the United Nations Conference on Trade and Development (UNCTAD), global foreign direct investment increased by 77 percent from 2020 to about $1.65 trillion in 2021, surpassing pre-pandemic levels.
"Global foreign direct investment (FDI) flows rose 77 percent to about $1.65 trillion in 2021, up from $929 billion in 2020, surpassing their pre-pandemic COVID-19 level," according to the research released on Wednesday.

The most significant increase was reported in developed countries, with FDI reaching $777 billion, more than double the level of 2020.

Capital inflows to the United States more than doubled, according to UNCTAD, with the increase owing completely to a surge in cross-border mergers and acquisitions.

"FDI flows to developing nations climbed by 30% to approximately $870 billion," according to the report, "with growth quickening in East and South-East Asia (+20 percent), Latin America and the Caribbean recovering to roughly pre-pandemic levels, and West Asia growing."

According to UNCTAD, the recovery is unlikely to happen again in 2022. A long-term health crisis followed by future pandemic waves is still a significant threat. "Vaccination rates, particularly in emerging nations, and the speed with which initiatives to promote infrastructure investment are implemented remain significant uncertainties," the research states.

Other significant threats to investment this year include labor shortages, supply-chain bottlenecks, energy prices, and inflationary pressures, according to UNCTAD.