Developed Economies Are Left Without Investors

Non-profit Partnership, World Organization of Creditors (WOC) was established in 2009 to unify the creditors by well-established organizations with years of practical experience in the international financial market. WOC Research – is a project of the World Organization of Creditors (WOC) which analyzes the global and regional economies.

Developed Economies Are Left Without Investors (Microsoft Word)

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Analysts of the World Organization of Creditors are confident that investments in developing markets look much more logical and promising today. The revival of global macroeconomics exists only in words, while in reality the situation in many countries remains extremely difficult. According to the preliminary results for 2012, global economic growth was only 3.3%, while for the majority of large developed economies it was zero. It’s no wonder that UNCTAD, summing up the results for 2012, noted the 18% reduction of global growth of foreign direct investments (FDI).

The revival of global macroeconomics exists only in words, while in reality the situation in many countries remains extremely difficult. According to the preliminary results for 2012, global economic growth was only 3.3%, while for the majority of large developed economies it was zero. It’s no wonder that UNCTAD, summing up the results for 2012, noted the 18% reduction of global growth of foreign direct investments (FDI). Analysts of the World Organization of Creditors are confident that investments in developing markets look much more logical and promising today.

 

General Downward Trend

 

Last year definitely wasn’t an easy one: Investors were troubled by several factors at once, including the eurozone crisis, the threat of the “financial cliff” in the USA, and changes of government in several large countries, which will undoubtedly influence the investment policies of the states. Thus the positive trend of increasing FDI during the last three years came to naught. According to UNCTAD’s preliminary results, in 2012 global foreign direct investments fell by 18.3% ($300 billion) and amounted to $1.3 trillion.

 

Source: WOC according to data from UNCTAD. The data for 2012 are preliminary/ Inflow of foreign direct investments, $ billions

Decrease in FDI flows is noted in virtually all groups of countries, but the losses were particularly evident in the developed economies. At the beginning of the 2000s, those countries received almost 80% of FDI, while developing economies got no more than 20%. But over the last 12 years, the latter managed to pull in more than half the world FDI.

 

 

Source: WOC according to data from UNCTAD. The data for 2012 are preliminary. World FDI flows,  $ billions.

According to UNCTAD, developing economies were very popular among investors in 2012, despite the slight 3% reduction in FDI. Asia and Oceania turned out to be the least popular developing regions, with FDI flow there decreasing by 9.5%. Meanwhile, FDI in Africa and Latin America continued to grow by 5.5% and 7.2%, respectively.

Table 1. FDI by key regions

Region FDI inflow, $ billions
2010 2011 2012 (estimated) Change 2011/2012
Worldwide 1,381 1,604.2 1,310.7 -18.3%
Developed countries 674.9 807.8 548.9 -32.1%
EU 358 440 287 -34.8%
USA 197.9 226.9 146.7 -35.3%
Developing countries 630.9 702.7 680.4 -3.2%
Africa 43.2 43.4 45.8 5.5%
Latin America and the Caribbean 187.9 217 232.6 7.2%
Asia and Oceania 397.8 440.7 399 -9.5%
Transition economies 75.2 93.7 81.4 -13.1%
The CIS countries 70.6 86.5 78 -9.9%

Source: WOC according to data from UNCTAD. The data for 2012 are preliminary.

 

Meanwhile, last year the EU and the United States received 35% less FDI than in 2011. That is why, compared to the one-third decrease in FDI inflow to developed countries, the 3% decline in developing economies doesn’t look disastrous. A steep decline of interest in the USA wasn’t critical for that country either: America remains the largest recipient of foreign direct investment in the world.

 

The transition economies turned out to be the most stable with regard to FDI. UNCTAD experts refer to Southeastern Europe and the Commonwealth of Independent States (CIS) as such economies. However, total FDI decreased slightly in these regions as well: They received 13% less than in 2011.

 

Table  2. FDI in developed countries

Region FDI inflow, $ billions
2010 2011 2012 Change 

2011/2012

Developed countries 674.9 807.8 548.9 -32.1%
The EU 358 440 287 -34.8%
Belgium 85.7 103.3 19.3 -81.3%
Great Britain 50.6 51.1 62.5 22.2%
Germany 46.9 40.4 1.3 -96.8%
Ireland 42.8 11.5 39.6 245%
Italy 9.2 34.3 5.3 -84.7%
France 30.6 40.9 58.9 43.8%
Australia 35.2 65.8 48.5 -26.3%
Canada 29.1 41.4 47.2 14%
USA 197.9 226.9 146.7 -35.3%

Source: WOC according to data from UNCTAD. The data for 2012 are preliminary.

 

REFERENCE: Non-profit Partnership, World Organization of Creditors (WOC) was established in 2009 to unify the creditors by well-established organizations with years of practical experience in the international financial market. WOC Research – is a project of the World Organization of Creditors (WOC) which analyzes the global and regional economies.

 

 

 

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