Down 12% from the previous year to $1.3 trillion —
Downward pressure on global foreign direct investment mounts
Our reporter Sun Changyue
On July 5, local time, the United Nations Conference on Trade and Development released the “World Investment Report 2023”, which showed that due to factors such as the conflict between Russia and Ukraine, rising food and energy prices, and soaring public debt, global foreign direct investment in 2022 will be higher than that of the previous year. It fell 12% to $1.3 trillion.
FDI inflows to advanced economies will fall by 37% to $378 billion in 2022, while FDI inflows to developing countries will rise by 4% to $916 billion, the report said. By industry, the number of investment projects in industries facing supply chain challenges, such as electronics, semiconductors, automobiles and machinery, surged, while investment in the digital economy slowed down.
The report shows that the combination of multiple negative factors makes 2022 the worst year for foreign investment since 2009, except for 2020 when the new crown epidemic broke out.
Even so, the drop was smaller than the U.N. expected, given the scale of economic uncertainty facing businesses. UNCTAD Secretary-General Rebecca Greenspan said the outlook for international investment looked extremely bleak last year, and international investment flows did suffer, but they were more resilient than expected.
It is worth noting that against the backdrop of a global decline in foreign direct investment, foreign direct investment into China will increase by 5% in 2022, reaching US$189 billion. Most of them come from European multinational companies, and their investment fields are concentrated in manufacturing and high-tech industries.
FDI in developing Asia remained flat at $662 billion in 2022, accounting for about half of global inflows, the report said. Inflows to the region are highly concentrated in China, Singapore, Hong Kong, India and the United Arab Emirates, which account for almost 80% of FDI in the region. The report also pointed out that in terms of investment sources, mainland China and Hong Kong are still the largest investors in Asia.
Looking ahead, UNCTAD expects that downward pressure on global foreign direct investment will continue in 2023. This was due to a slowdown in investment growth in renewable energy due to fewer international project finance deals.
Data show that developing countries need about US$1.7 trillion in renewable energy investment each year, but they will attract only US$544 billion in foreign direct investment in 2022. International investment in renewable energy generation, including solar and wind, grows 8% in 2022, down from 50% growth in 2021.
The report pointed out that since the adoption of the Paris Agreement in 2015, international investment in renewable energy has nearly tripled, but the growth rate has slowed down in 2022, and most of the growth has been concentrated in developed countries.
Developing countries are working hard to achieve the United Nations Sustainable Development Goals by 2030, but their annual investment deficit continues to expand. The investment gap has expanded from US$2.5 trillion in 2015 to about US$4 trillion per year today. Among them, the largest funding gap is in the fields of energy, water conservancy and transportation infrastructure, and the widening gap is caused by insufficient investment and additional demand.
In this regard, Greenspan said, “Significantly increasing investment in sustainable energy systems in developing countries is essential for the world to achieve climate goals by 2030.”
In order to help developing countries attract more investment, UNCTAD not only proposed a series of priority measures ranging from financing mechanisms to investment policies in the report, but also emphasized the necessity of debt relief.
According to UNCTAD, this could provide developing countries with the fiscal space to make the necessary investments in the transition to clean energy and help them attract international private investment by lowering country risk ratings. (Economic Daily)
2023-07-07 22:20:43
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