Global FDI inflows fall in 2008 for 1st time in 6 yrs

GENEVA: Global inflows of foreign direct investment fell in 2008 for the first time in six years and are expected to fall further in 2009 before a slow recovery in 2010, a UN agency has said.

Global FDI inflows fell 14 per cent from a record high of USD 1.98 trillion in 2007 to USD 1.70 trillion and are estimated to fall to less than USD 1.2 trillion in 2009, the UN Conference on Trade and Development said yesterday.

"The current global financial and economic crisis has had a dampening effect on FDI," it said in an annual report.

The decline in 2008 was attributable to a 29 per cent drop in FDI inflows to developed countries due largely to a sharp fall in cross-border mergers and acquisitions.

In contrast, developing economies as well as transition economies in the Commonwealth of Independent States and Southeast Europe -- Albania and the former Yugoslav states excluding Slovenia -- saw FDI inflows rise to record levels in 2008.

In 2009, however, FDI flows to all regions are forecast to decline, UNCTAD said.

The United States remained the largest recipient of FDI in 2008 despite the turbulence in financial markets, which originated in the country and led to its sharpest economic downturn in decades. FDI flows to the United States rose 17 per cent to USD 316.11 billion.