Global FDI inflows likely to be $1.6 trillion in 2011: UN

By PTI Jul 26 2011 , New Delhi

Foreign direct investments worldwide are projected to return to pre-crisis levels this year, with

inflows expected to be up to $ 1.6 trillion, according to a UN report.

UNCTAD's 'World Investment Report 2011' released here today said that recovery of FDI inflows would continue this year while pegging the amount at around $ 1.4 trillion to $ 1.6 trillion.

Bogged down by the 2008 financial meltdown and its ripple effects, FDI worldwide tumbled to just $ 1.19 trillion in 2009. Last year, the inflows were slightly better at $ 1.24 trillion.

In 2008, FDI flows stood at $ 1.74 trillion.

"The record level of cash holdings, low rates of debt financing and rising stock market valuations of transnational corporations should encourage them to expand overseas...," the report said.

Last year, more than half of the global FDI inflows were into developing countries and transition economies. However, foreign direct investments in services as well as in the financial industry slumped during 2010.

As per the report, cross border non-equity modes (NEMs) are increasingly shaping the global value chains. NEMS include contract manufacturing, services outsourcing, contract farming, franchising and management contracts, among others.

NEMs of international production generated at least $ 2 trillion in sales globally in 2010 are growing rapidly, shaping world trade and investment patterns, the report noted.

However, UNCTAD cautioned that global business environment is still beset by uncertainties.

Risk factors such as a possible widespread sovereign debt crisis, fiscal and financial sector imbalances in some developed countries as well as inflation and signs of overheating in major emerging market economies could derail FDI recovery, the report said.

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