- Wednesday, April 24, 2024
By: Shilpa Sharma
CHINA, Hong Kong, India and the United Arab Emirates negated the global trend by registering a growth in foreign direct investment (FDI) flows in the pandemic hit 2020, according to a UN report released on Monday (21).
Global FDI flows dropped 35 per cent to $1 trillion (£720 billion) from $1.5tn (£1.1tn) in 2019, as per the World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD).
Lockdowns imposed around the world to curb the spread of Covid-19, slowed down existing investment projects, however, some Asian countries showed resilience.
China’s FDI grew six per cent to $149bn (£107 bn) in 2020, reflecting the country’s rapid economic recovery, while Hong Kong registered a 62 per cent increase to $119bn (£85.7bn).
FDI in the United Arab Emirates rose by 11 per cent to $20bn (£14.4bn), backed by significant acquisitions in the energy sector.
In India, FDI increased 27 per cent to $64bn (£46bn), backed by acquisitions in the information and communication technology (ICT) industry.
India became the fifth largest FDI recipient in the world in 2020.
The UN report said the Covid-19 second wave in India weighs heavily on the country’s overall economic activities, but its strong fundamentals provide optimism for the medium term.
Major project announcements in the ICT industry included a $2.8bn (£2bn) investment by online retail giant Amazon in India.
Investment into the ICT industry in India is expected to grow further, the report said.
The country’s export-related manufacturing, a priority investment sector, will take longer to recover, but government facilitation can help, it added.
To boost investment in this sector, the Indian government announced the Production Linkage Incentive scheme for priority industries including automotive and electronics.
FDI in south Asia grew by 20 per cent to $71 bn (£51bn), driven mainly by mergers and acquisitions in India, the report said.
However, FDI outflows from south Asia dropped 12 per cent to $12 bn (£8.6bn) due to decline in investment from India. India ranked 18 out of the world’s top 20 economies for FDI outflows.
Investments from India are expected to stabilise in 2021, supported by the country’s resumption of free trade agreement (FTA) talks with the EU and its strong investment in Africa, the UN report said.
