UNCTAD’s World Investment Report 2022 Came out recently. Figure 1 depicts the recovery of FDI inflows.
While flows have recovered, they have not returned to levels reached before Mr Trump’s trade war.in the previous postal, Jardet, Jude and I attribute the decline (pre-2020) to trade war-related uncertainty. Figure 2 shows the rebound in inflows in 2021.
Looking ahead, the report states:
This fragile growth in real productive investment is likely to continue into 2022. The aftermath of the war in Ukraine and the triple crises of food, fuel and finance, as well as the ongoing COVID-19 pandemic and climate disruption, are adding to the pressure, especially in developing countries. Global growth forecasts for this year have already fallen by a full percentage point. The momentum of a recovery in international investment is likely to stop prematurely, hampering efforts to finance sustainable development.
in our PaperCaroline Jardet, Cristina Jude and I found that FDI inflows respond to economic uncertainty, so it is really difficult to maintain high levels of flows in this environment (postal).
Below are the OECD estimates of FDI inflows in the first quarter, together with the GDP-weighted World Uncertainty Index (used for Jude Jude Chinn (2022)).
figure 1: Global FDI flows, US$ billion. resource:OECD.
figure 2: GDP-weighted WUI. resource:worlduncertainty.com.
