Global investment to fall further in 2009: UNCTAD

Geneva (AFP) – Global foreign direct investment flows are expected to plunge even further this year, after falling some 15 per cent in 2008, the United Nations trade and investment think-tank UNCTAD said Monday.

‘The decline in FDI (foreign direct investment) will be far deeper this year,’ UNCTAD (UN Conference on Trade and Development) secretary general Supachai Panitchpadki said in a statement.

‘There are indications that a deep decline will take place — with a great degree of variation between countries and regions,’ he added.

FDI reached a record 1.9 trillion dollars (1.42 trillion euros) in 2007, but fell 15 per cent in 2008, according to revised UNCTAD data.

The body noted in an advance copy of a report on the impact of the economic crisis on FDI that in developing countries, a ‘dramatic fall was observed only in the first quarter of 2009.’

China showed a 26 per cent decline in FDI during the first two months of 2009, according to a copy of the report obtained by AFP. UNCTAD classifies China for the purposes of its investment surveys as a developing economy.

With banks still struggling to cope with heavy losses from the financial crisis, financing would be harder to come by, Panitchpadki explained.

“No new borrowing, no new flows of funding mean little new investment internationally,” he added.