FDI worldwide dropped by about 40 per cent in 2009

KUALA LUMPUR: The United Nations Conference on Trade and Development (UNCTAD) says the global flows in foreign direct investment (FDI) dropped by about 40 per cent to USD 1 trillion in 2009 from USD 1.7 trillion in 2008.

UNCTAD indicated this in the "Monitor", its new quarterly publication and the second issue released yesterday.

The organisation also reported that FDI flows remained relatively stable during the third quarter of 2009 but at a low level. No pick-up in FDI was detected in the fourth quarter.

"The overall decline in FDI for the year was widespread across all major groups of economies.

"After experiencing a severe reduction in 2008, FDI flows to developed countries continued to plummet,dropping by a further 41 per cent in 2009," UNCTAD said.

According to the UNCTAD,flows to developing and transition economies which rose in 2008,declined by 39 per cent in 2009 as the global financial and economic crisis continued to unfold.

It added that in terms of the mode of entry of FDIs, cross-border mergers and acquisitions were the most affected, as it decreased by 66 per cent in 2009 compared to the previous year.